When you want to make a credit, it does not matter if it is a consumer credit, a Personal Payday loan or a home loan, it is necessary to take stock of its financial situation, on its borrowing capacity and obviously on the feasibility of the project. For this, many websites offer individuals a loan calculator. By typing in the Google search engine “loan calculator”, the individual will be spoiled for choice to estimate different parameters. Based on his Personal Payday information, the individual can then make estimates from his loan calculator.
Loan calculator: criteria common to different credits.
Whether we talk about consumer credit or mortgage credit, the individual can estimate using these different loan calculators available to him parameters allowing him to take stock of his financial situation and better consider the project he wants to finance. To make it easier for him, we will review each loan calculator he can meet on the internet and the different criteria to take into account when embarking on the realization of a credit.
Loan Calculator: Debt ratio
When it comes to loans, regardless of the nature of the loan, the important thing for the individual is whether they can borrow. The first criterion to take into account is therefore its debt ratio before applying for a loan. But what is the debt ratio? how to calculate it? is there a loan calculator to estimate it?
The debt ratio is the percentage of the household budget that is devoted to the repayment of debt related to loans (Personal Payday loan, revolving credit, mortgage loan, etc.). In France, although there is no law setting a maximum rate, it is generally accepted that the debt ratio must not exceed one third of the household’s fixed income. Indeed, the banking institutions consider that households, not to end up in a critical financial situation, should not exceed a debt ratio of more than 33%. Beyond that, the consumer risks being over-indebted, namely that he will no longer be able to honor his debts. At this stage, in addition to the repayment of debts or a repurchase of credit which can lighten the part related to the repayments of the debts, the individual will be obliged to exceed a folder of overindebtedness with the Bank of France. This is significant because the particular will be listed on the files of the Bank of France. He will therefore be unable to borrow money. Indeed, one of the main conditions to subscribe to a credit is not to appear as a bad payer on the cards of the Bank of France.
So as not to arrive at this stage, the individual can use a loan calculator to define his current debt ratio and estimate how much of his budget he can devote to the repayment of his new credit.
For this, on the internet, many organizations offer consumers a loan calculator. On most of these sites, the individual can therefore perform a simulation of this rate through a loan calculator.
If the consumer wishes to use this loan calculator, he will generally have to fill in the following elements:
- Its annual fixed income (if applicable that of the co-borrower),
- Other sources of income,
- Non-compressible charges after the credit (the rent is not to be taken into account in the case of the calculation of a debt ratio for a mortgage),
- The possible repayment of a mortgage,
- Repayments of consumer credit
- Other charges.
As a result, the loan calculator allows the individual to know his debt ratio and therefore to estimate how much of his budget he can devote to his loan project.
Loan calculator: Calculation of the “rest to live”
The individual must also be interested in calculating his “rest to live”. The “remainder to live” is the part of its budget that allows it to honor the non-compressible fixed costs. To know the “rest to live”, the individual can also use a loan calculator.
This calculation is quite simple. The individual must first list all his fixed income. These revenues may be different depending on the lending institution. In fact, if it makes sense to take fixed wages (as indicated on the tax notices) of the individual and, where applicable, the household, in the fixed incomes, some institutions will take into account the allowances, or even family allowances if they are received during the entire duration of the loan. In addition, some institutions may take into account the benefits in kind that can be perceived by the individual by his or her professional situation, for example. The 13th month as well as the commissions and the alimony will be counted in the amount of the fixed incomes. On the other hand, exceptional bonuses, overtime, reimbursement of professional expenses (expenses incurred by employees), incentive bonuses or participation bonuses will not be accounted for in this amount due to their random nature. Nevertheless, these gratuities not taken into account in the calculation of the salary can facilitate the obtaining of a credit with a banking establishment.
When the borrower is retired or in a state of invalidity, these benefits are included in fixed income, as these are recognized by the State receiving state bonuses. However, institutions can request a check-up for seniors to ensure that there are no health concerns that could affect loan demand.
In addition, in the case of rental income, some institutions will take into account 70% of this income in the calculation of the individual’s fixed income.
In a second step, the individual will have to list the so-called mandatory monthly charges. In these expenses, the individual must take into account his rent, the monthly payments of credits in progress, any pensions that the individual must pay, travel expenses to go to his place of work, electricity bills, water and gas, taxes, taxes, home insurance. It is important to remember that the term incompressible charges is subjective. Indeed, it depends on the particular to determine what are the so-called optional charges of so-called mandatory charges. Finally, the individual must not take into account the amount of his rent when it comes to a mortgage.
The loan calculator can easily give the share of the remaining budget for the daily expenses is the “rest to live”. This calculation therefore consists of a simple subtraction between the fixed incomes and the incompressible charges. The consumption code (article R331.10.2) sets a minimum threshold that should not be exceeded. This “remainder of life” threshold is equal to the value of the RSA on January 1, 2016. This threshold is increased by 50% when it is a couple. To date, the “rest to live” is estimated at 535.17 euros for a single person without children.
Loan Calculator: Capital Remaining Due
When the individual seeks to know the amount he has to repay on his loan, he will find on the internet a loan calculator to know the outstanding capital on this credit. For this, the individual must have provided some information: the amount of the amount borrowed, the credit period, the interest rate and the date of the first withdrawal. If we take the example of a credit of 150000 euros over 25 years, at a rate of 1.05%, the first repayment was made on July 1, 2010, on October 1, 2016, from a loan calculator, it Remain 116105 euros to be reimbursed by the individual at his bank.
This type of loan calculator can be interesting for the individual who is looking to renegotiate his mortgage. Indeed, even if other criteria are taken into account as the difference of at least 1 point between the interest rate at the time of the loan and the current interest rate, the capital remaining due must be high enough to that the negotiation is interesting for the consumer. So even if the opinions are somewhat divergent, the experts agree that the remaining capital must be at least 50000 euros (or 70000 euros according to some websites). The use of a loan calculator therefore facilitates this type of transition.