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A loan comparison rate calculator is a very important tool for borrowers. Comparing loans is very important in today's world. There are different lenders available, providing different types of loans at varying periods, principal amounts, and conditions. So, if a person takes a loan without comparing it with other lenders providing the same kind of loan, there is a high chance that the individual will lose a fair chance of getting a better deal. A person should always choose a loan that they can afford properly, providing them with financial and non-financial benefits. Comparing two loans also helps people understand different loan rates and fee structures for the loans and helps them explore many loans. It can also be possible to properly understand the annual percentage rate and closing cost, which can later help an individual.
Loans can be a useful solution to cover your expenses when you have inadequate funds or require long-term assistance to accomplish your goals. For example, starting a business, finishing school, purchasing a car or home, or making any other significant financial decision.
Finding the ideal loan for you, though, might be difficult. Numerous factors need to be considered, and a loan's terms can greatly alter its cost. You are not only repaying a monthly principal; you must also consider any applicable interest charges, monthly service charges, and any additional costs that might arise.
It would be best to consider other factors besides your borrowing limit when comparing loans.
What is a loan comparison calculator?
A loan comparison calculator helps an individual compare the total amount of interest to be paid and the total amount to be paid at the end of the loan tenure. In this way, the individual can understand which loan will be better for him, considering the time period, the additional charges, the interest amount, and the total future cash flows that he will have to pay at the end of the loan tenure.
How does UMOceania's loan comparison calculator work?
UMOceania's loan comparison calculator does an excellent job. This calculator takes the common details of a loan, such as the actual loan amount, the monthly fees associated with the loan, the rate of interest, and the time period for which the loan has been taken. Along with this, the individual can also find the current interest rate for both loans. The loan comparison calculator then uses these pieces of information to determine which loan will be better for the person.
The loan comparison calculator developed by UMOceania uses a very simple process to calculate the total payment against a loan. It also helps compare two different loans taken for the same principal amount and for the same time period. However, one positive aspect is that there is no necessity for the loan to be taken from one single lender. Instead, the loan can be taken from two lenders with different interest rates. Here, a borrower can understand the total payments against each loan and decide which one he wants to select.
How to use the comparison rate calculator?
To use a loan comparison calculator, you must select two loans you want to compare.
The next step will be to collect basic information about these loans, such as the total amount of loan that will be issued and the interest rate associated with the loan. Along with this, you will also need information about the total loan period and the ongoing rate of the loan in the market.
The third step will be entering these values in UMOceania's loan comparison calculator page.
After putting these values, the calculator will automatically show the comparison results on the screen. It will show which loan will be more suitable for you depending on the amount of savings from that particular loan. It will also show the initial amount to be paid per month for each loan, the ongoing payment per month, and the total payment of these loans.
Features and Benefits
- A good feature of the loan comparison rate calculator is that it provides a diagrammatic representation or, rather, a graphical representation of the comparison rate, making it easy to understand the concept.
- One big feature of the loan comparison calculator of UMOceania is that it is easy to use.
- It also uses all the relevant data required to calculate the loan amount and interest amount
- It also considers the loan term to give accurate data about the loan.
How is the Loan Comparison Rate Calculated?
To calculate in UM Oceania's loan comparison calculator, you will need to mention all the relevant information here to compare the loan amounts of two different options. This can be presented with the help of an example:
Loan number 1
Suppose the loan amount is 500,000 for a term of 30 years
Ongoing monthly fees = 10
Intro rate = 4%
Intro term = 24 months
Ongoing terms = 5.50%
Loan number 2
Upfront fee: 30,000
Ongoing monthly fees: 50
Intro rate= 4.25%
Intro term = 36 months
Ongoing rate = 5%
Then the calculator will show which loan will be more suitable for the borrower depending on the time period, the interest rate and the principal amount, and other factors.
Pros and Cons
The first pro of the loan comparison calculator is that it helps individuals to compare two loans. This helps the individual to understand their ability and helps him in decision-making.
The comparison rate calculator also considers many factors for calculating and comparing the loan amount of two different loans. For example, it considers the intro term, the standard or revert rate, up-front fees, ongoing fees, end fees, and many other factors that help estimate the loan amounts accurately.
It provides a transparent picture of the loans by analyzing the loan's future value based on tenure, principal, and interest rate.
One biggest disadvantages of the loan comparison rate calculator is that this calculation is based on certain assumptions. There are different assumptions, like the interest rate or the loan tenure being fixed, which may not be true.
There is a high chance that market volatility will change the figures to a certain extent.
Moreover, another big disadvantage of this loan comparison rate calculator is that it does not consider more than two loans. Sometimes, an individual may need to compare 3 or 4 loans to decide which one is more suitable. However, he may need to compare these loans individually rather than simultaneously.
Thus, it can be said that the alone loan comparison rate calculator of UM Oceania is effective to a certain extent, and it is only an indication. The real cost for these loans will vary greatly, and an individual should not solely depend on the result of this calculator to determine which loan he will take.
Things you should know about loan comparison rate calculator
The Loan comparison rate calculator is an easy concept to grasp. However, many concepts are still associated with the loan comparison rate calculator. The comparison calculator covers many fees, and an individual must have proper information about each of these charges before calculating the comparison rate. Some of these fees include upfront fees like application fees, preapproval fees, valuation fees, legal fees, and many others. It also considered ongoing fees like annual service or package fees and discharge fees like settlement and discharge admin fees. However, some expenses are not covered in the comparison rate. For example, it does not cover expenses like late payment fees, government charges, lender's mortgage insurance, cashback deals, fee waivers, and redraw facilities.
Another thing every individual needs to understand is that a loan comparison rate is based on certain assumptions. For example, one of the biggest assumptions of this rate calculated is that the interest rate is fixed, which is impossible in reality.
Moreover, there is a high chance that the result shown in the calculator and the actual result at the end of the loan tenure will be a little different because of the inflation rates and other external variable factors.
Frequently Asked Questions
How can I use a loan comparison calculator to compare different loan options?
You need to have some basic information to compare two different loan options through a loan comparison calculator. These include knowledge about the principal amount you want to loan, the interest rate, the ongoing interest rate, and the period you want to take the loan. After collecting this information and putting it in the calculator, it will eventually give you the result.
Does the calculator take into consideration the interest rate for each loan option in Australia?
The loan comparison calculator UMOceania uses considers certain factors while comparing two loans. Out of all the other things, the interest rate of both loans is an essential factor here. The calculator considers the actual interest rate or the entering interest rate and the loan’s current interest rate. Therefore, it helps provide a realistic estimate of the loan amounts and helps in comparison.
Can I include additional fees in my loan comparison calculation in Australia?
Yes, you can add additional fees for taking out a loan while calculating the comparison rate. Including the additional fees helps provide more accurate results about the loan amounts, the total fees payable, and the total payment.
How does the calculator help me determine the cost of a loan over time in Australia?
In Australia, the comparison rate calculator also considers many factors for calculating and comparing the loan amount of two different loans. For example, it considers the intro term, the standard or revert rate, up-front fees, ongoing fees, end fees, and many other factors that helped properly estimate the loan amounts.
Can the calculator help me compare loans from different lenders in Australia?
The UM Oceania’s comparison rate calculator available in Australia helps an individual compare different loans from one single lender and from two different lenders so that he can understand which one is more affordable and suitable for him.