Debt Repayment Calculator
Results
Your estimated monthly loan repayments are which equate to % of your net monthly income.
| Summary | |
| Take-home pay | |
| Less: mortgage payment | |
| Less: other debt payments (loans & credit cards) | |
| Equals: disposable income | |
| Mortgage payments as a percentage of your take-home pay | % |
| Other debt payments as a percentage of your take-home pay | % |
| Disposable income remaining as a percentage of your take-home pay | % |
Debt Repayment Calculator
How does a debt repayment calculator work?
You will find a lot of options online to use a debt repayment calculator. The input fields may vary from one website to another. Mostly, you may be asked to fill in the following details:
- The amount you wish to borrow or borrowed
- Term of the loan
- Interest rate
- Annual percentage rate
Post entering the details, the calculator will show you how much you will have to repay every month towards your loan.
Benefits of using a debt repayment calculator
Generally, a debt repayment calculator is used to have an estimate of the amount that you need to repay to your lender or bank.
Listed below are the few benefits of using a debt repayment calculator:
- You can plan your budget beforehand
- You can stay on track with your finances
- It will help you in knowing the repayment amount beforehand, which will reduce the probability of loan default
Calculating Debt Repayment
Calculating the repayment amount of your debt becomes easier with a calculator. Let us delve deeper to find out how it will help you in managing your finances smoothly when you are about to or have already borrowed a loan that you have to repay.
Determining the total debt amount owed
The amount you need to borrow is not the same as what you owe back to the lender or the financial institution. The loan amount you owe will be calculated after taking the interest rate, annual percentage rate, term of the loan, and the repayment period you choose to pay back the loan.
Factors affecting debt repayment calculations
There are various factors affecting debt repayment calculations. Mostly, the factors that influence your monthly repayment amount are:
- Type of loan you have borrowed
- The amount you have borrowed
- Loan term or duration you have chosen
- The interest rate of the loan
- Annual percentage rate of the loan
Different repayment strategies and their impact on calculations
How you repay the loan has an impact on the debt repayment calculation and also on the interest rate the lender, bank or any other financial institution will charge you. For example, if you choose to repay the loan over a longer period of time, the interest rate will be high, however, the monthly repayment amount will be lower.
Similarly, if you choose to pay the loan quickly, you will have to pay more in monthly repayments, but you can save on the interest in the long run.
Debt Snowball vs. Debt Avalanche
You may be able to pay off your debt faster and free up cash for other uses by managing your repayments strategically. Which method do you choose — the debt snowball or the debt avalanche? These are two very popular methods for paying off credit card debt and other types of borrowing. Both are efficient, but they function differently and might not be appropriate in all situations.
Here, we go into greater depth about these two debt repayment strategies so you can decide which is best for you.
Understanding the debt snowball and debt avalanche methods
The Snowball Method of Paying the Debt
The main goals of the Snowball approach are to inspire and build momentum. Pay the minimal amount due on everything but the smallest debt from the list of debts you have just filled out. Try to allocate as much extra cash as you can to the least debt. After you have paid off the smallest debt, add the amount you were paying on it to the next biggest loan. And so on till you have finished each of your debts!
Let us take an example to understand how the method works:
Type of Debt | Amount you Owe | Annual Percentage Rate (APR) | Monthly Repayment Amount | Order of Priority |
Personal Loan | £10,000 | 18% | £460 | 3 |
Credit Card | £5,000 | 12% | £300 | 2 |
Overdraft | £500 | 20% | £20 | 1 |
Total | £15,500 |
| £780 |
|
The Avalanche Method of Paying the Debt
Making minimal payments on all of your debt obligations except the one with the highest interest rate. When you pay off your debts in this approach, it is called the avalanche method. Any extra funds from your budget will be used to increase your payments on this debt.
The goal is to prioritize paying off the account with the highest interest rate while making payments on your other debts. It can take some time before you entirely pay off this loan because it’s possibly one of your larger ones. But if you go with this strategy, you will typically end up saving money on interest over time.
Assessing the benefits and drawbacks of each method
Pros of Debt Snowball Method
- It gives you a confidence boost and a feeling of accomplishment in the beginning because you will probably be able to pay off the smaller bills very fast.
- It’s an easy process to comprehend and use.
Cons of Debt Snowball Method
- With this strategy, you might not be paying off the most expensive debt first, so you might end up paying more interest over time than if you had utilised the avalanche method.
- It typically takes more time than the avalanche technique to pay off your obligations with this method.
Pros of Debt Avalanche Method
- Focusing first on the debt with the highest interest rate could result in long-term financial savings.
- If you don’t employ the debt snowball strategy, you can pay off your debts more quickly.
Cons of Debt Avalanche Method
- It will take some time. In comparison to the snowball approach, it could take longer for you to experience the confidence boost and sense of success that come with paying off a debt in full.
- You may initially be sacrificing money from your budget or disposable income for a considerable amount of time because it can take some time for you to return your first loan in full.
Warning Signs
Here are some signs that indicate financial trouble or a debt problem:
Your Recurring monthly debt amount is high.
You’re struggling with debt collectors.
Frequent use of balance transfer cards or refinancing to avoid sinking.
You often use cash advances.
Your loan and credit card applications don’t go as planned.
You don’t have and aren’t building an emergency fund/savings fund.
You’re avoiding your debt problems or don’t know how much you owe.
You have never used a free debt repayment calculator to get a purview of your monthly liabilities.
You do not have a budget, and you’re constantly in debt.
Your card gets declined as you’ve maxed it out.
Your debts are impacting your relationships.
How to Keep Your Debt Under Control
There’s no one rule when it comes to controlling debt. What works for one may not work for the other. So approaching financial planning with a ‘one size fits all outlook will not benefit you. However, there are some common pointers that all of us could learn a thing or two from:
Contemplate your spending habits and change them if required.
Make a budget to plan your expenses.
Prioritise your repayments. Use a paying-off debt calculator in UK
Keep making minimum repayments if you’re struggling to repay the full amount.
Build an emergency fund to be your financial cushion.
Avoid taking on new debt.
Tame Your Financial Anxiety
Debt is a necessary evil. We all owe one of the other forms of debt. What’s important is the way you deal with it. If you continue to spend over your limits and make debt a habit, it’ll deteriorate your financial health. Your credit score takes the biggest hit if you fail to demonstrate responsible credit behaviour. This could also ruin your chances of getting a loan in the future.
We understand how difficult making repayments can be in this post-COVID-19 period. With layoffs and wage cuts, making ends meet takes a lot of work. The best you can do is structure your finances into a budget and adhere to it. Even making minimum monthly repayments can build you a compelling case.
Use our free debt repayment calculator to assess your affordability and plan your finances accordingly.
If you need help bridging some of your financial gaps, LoanTube can help. Compare rate-locked loans from multiple lenders to find your ideal loan.
FAQs
What is a debt repayment calculator?
A debt repayment calculator is a tool that you can use to estimate the amount that you have to repay for the loans that you have taken out.
How does a debt repayment calculator work?
A debt repayment calculator takes the amount you owe, the interest rate, annual percentage rate, the type of loan you have borrowed, the repayment period into consideration to calculate the repayments.
Why should I use a debt repayment calculator?
A debt repayment calculator will give you an idea about the amount you have to pay every month towards your debt. It will help you in creating a budget and following it easily.
Can a debt repayment calculator help me become debt-free?
If you follow the budget strictly that you have prepared after determining the amount you have to repay each month, a debt repayment calculator may help you become debt-free.
What types of debts can I calculate using a debt repayment calculator?
Whether it is a credit card debt, or a personal loan, auto loan – a debt repayment calculator can help you determine the amount you need to pay back toward your debts.
What information do I need to input into a debt repayment calculator?
You will need to input the following details in most of the debt repayment calculator:
■ Type of loan you have borrowed
■ The amount you have borrowed
■ Loan term or duration you have chosen
■ The interest rate of the loan
■ Annual percentage rate of the loan
How accurate are the results from a debt repayment calculator?
Most of the debt repayment calculators will help you find out the closest estimate of the repayment amount only if the inputs are accurate.
Can a debt repayment calculator help me compare different repayment strategies?
Yes. A debt repayment calculator can help you compare different types of repayment strategies to help you choose the best one as per your finances.
Can I use a debt repayment calculator for debt consolidation?
Yes, using a debt repayment calculator for consolidating your debts is a wise financial decision as it will give you an idea about the amount you owe and how much you have to pay back to clear your debt shelf.
Will using a debt repayment calculator impact my credit score?
No. Using a debt repayment calculator will not impact your credit score.
Can a debt repayment calculator help me create a repayment plan?
Yes. A debt repayment calculator can help you create a repayment plan as per your debts, income and outgoing.
How frequently should I use a debt repayment calculator to track my progress?
You can track your progress every month by using a debt repayment calculator. However, as it doesn’t impact your credit score, you can use the calculator as and when you want to.
Can a debt repayment calculator help me save money on interest?
Yes. A debt repayment calculator can help you save money on interest by allowing you to compare what different repayment strategies will cost you.
Are there any limitations to using a debt repayment calculator?
No, there are no limitations to using a debt repayment calculator. It is only that sometimes it may not give you the exact amount you have to repay.
Is it necessary to use a debt repayment calculator for all my debts?
You may use a debt repayment calculator for all your debts if you wish.
Can a debt repayment calculator factor in additional payments or lump sums?
Some of the debt repayment calculators are designed to with an input field for additional payments or lump sums while some of them do not have this field. Hence, check the calculator for the input fields and use one that you think can give you the closest estimation.
Can I use a debt repayment calculator for loans with variable interest rates?
It is a bit challenging to use a debt repayment calculator for loans with variable interest rates as the interest rates will keep on changing throughout the loan term. And the interest rates are also not predictable.
How can I use the results from a debt repayment calculator to make informed decisions?
The result you get from a debt repayment calculator can help devise a repayment strategy as per your financial goals, income and expenses.
Where can I find a reliable debt repayment calculator in the UK?
There are various websites that offer you to calculate your debt. LoanTube has a free online debt repayment calculator that you can use for determining the debt that you have to pay.
Should I consult a financial advisor in addition to using a debt repayment calculator?
It is always a wise idea to consult a financial advisor in addition to using a debt repayment calculator as they can guide you better with customised and tailored strategies as per your finances.
