How do I Choose the Best Amortization Calculator?

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  • Written By: Keith Koons
  • Edited By: Lauren Fritsky
  • Last Modified Date: 12 February 2020
  • Copyright Protected:
    Conjecture Corporation
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An amortization calculator is a tool used by consumers to quickly ascertain financing options for large purchases. Since convenience is normally the main reason for using one, it is important to select an amortization calculator that grants plenty of options in a manner that is easy to understand. Not only should it accept the standard inputs such as the total purchase price, finance rate, and the length of the financing term, but it should also provide an input for down payments and any other fees that may alter the repayment schedule. Having the option to view an amortization schedule is also a large benefit, especially if the amortization calculator has the ability to view how extra payments will affect the overall interest variances on the loan.


Of course, the most essential aspect of an amortization calculator would be to generate the monthly payment that would be owed to a financial institution. Every single tool available on the Internet will produce this figure, and if that is the only thing sought after, then it will be an easy search. Those interested in finance will likely wish to access a few more factors though, and since loans can be structured many different ways, it is important to have extra configurations. For example, many lending institutions will provide an introductory rate for a certain length of time and then require a higher monthly fee or even a balloon payment at a certain date afterward. A good amortization calculator should be able to plan for each of these events.

Good amortization calculators should also be able to generate a monthly payment schedule so borrowers can quickly locate their payoff amount at any given time. While the lender normally provides this information beforehand, it is based on if each payment is made according to schedule. Many consumers will send an extra amount each month in order to reduce the overall compounding interest, since even minimal payment increases can have a large impact on the balance. Lenders intentionally withhold this type of information to maximize their potential profits, and an amortization calculator is the only simple way to make these comparisons.

There are many other situations that could change a consumer's monthly payment, so each of these aspects should be available in a top amortization calculator as well. Many mortgage payments will also include property taxes and various insurances, which are factors that can change often. It is not uncommon for financial institutions to mistakenly adjust payments as well, so consumers should always double check their payment schedules with an amortization calculator to ensure that they remain in compliance.



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