Debt Calculators

Debt calculators are employed by a number of websites and banks to determine how much time and money you will need to pay down your debt.  Credit cards and loans require a minimum amount due each month, which is often calculated low, and keeps debtors beholden to the principal amount lent.  A debt calculator can help consumers pay down their debts faster by providing a little financial planning.

A good use of debt calculators is to start with high interest credit card loans.  Since debt calculators are programs that give a payment timeline, consumers can put priority on high interest loans, and use debt calculators to pay down those loans first. No matter what though, it is important to remember to pay at least the minimum amount due on time every time.

Self repayment plan

Debt calculators are a tremendous help to those creating a self repayment plan.  This is an entirely self involved debt relief plan, which manages debts without the help of professional debt relief programs. This involves making a list of unpaid debts, prioritize them, and then preparing a budget to pay off bills and manage daily expenses efficiently.  Use a debt calculator to figure how quickly debts can be paid off with available capital.

Consolidation Debt Calculators

With interest rates at historical lows, it may make sense to consolidate some credit cards and other personal debt into a consolidated loan, typically a home-equity loan or personal loan. Consolidation loans can significantly reduce the required monthly payment because they are generally amortized over 10 or 15 years. This type of debt calculator is generally sponsored by a lending company, but they can be used as reference if need be.  Once all personal debts are accounted for, a new loan is created, which can consolidate your other debts into one loan.

Fixed Credit Card Payments

Another use of debt calculators is to help determine a fixed payment plan.  This is a great option for individuals with regular income or salaried positions.  Determining a fixed payment will decrease the amount of time it takes to pay down debt, while also decreasing the overall amount paid in interest on the loan.  This is a healthy alternative to paying the monthly minimums on credit cards.

Who should use a debt calculator?

Anyone who is having trouble paying their bills on time should seek out a debt calculator.  Inconsistent debt payments can undermine credit scores, however, debt calculators can provide a clear understanding of multi bills, and help organize bills into a priority payment plan.  Those with unpaid credit card bills, IRS tax debt, student loan, personal loans, unpaid utility bills, unpaid medical bills, or attorney bills should use debt calculators to help get organized.

 

After using a debt calculator

After using a debt calculator the time may be right to consider loan consolidation.  There are several ways to go about consolidating loans that are both secured and unsecured.   Loan consolidation does not instantly eradicate debt, but it can help organize debt and maximize payment efficiency.  Unsecured debt refers to debt that is not attached to an asset such as a house or a car this includes most student debt. Lenders offering unsecured loan consolidation have to rely on the borrower to repay them.  If the borrower does not repay the loan, the lender can charge fees but has no asset to seize in return. Therefore, interest rates on unsecured loans are generally high.

Secured debt is debt that is tied to, or secured by, an asset. If the borrower does not repay the loan, the lender can seize that asset as repayment. Therefore, secured debt usually has lower interest rates.  Examples of secured consolidation loans are home equity loans and car loans.

The ability to secure loan consolidation in regards to non-student loans will depend on four factors:

Income Level: The lender must assess the ability to repay the loan. If the borrower is not working, or if they have low income, they probably won’t qualify for a consolidation loan.

Loan Needed: Obviously it is easier to qualify for a $10,000 loan than for a $100,000 loan. The more money needed, the higher the borrowers income will need to be.

Collateral: Borrowing $200,000 off a house worth $400,000 is possible, and having collateral of this type will enhance the chances of getting a mortgage loan consolidation. If the borrower doesn’t own a home, or if their home has no equity, then it will be nearly impossible to qualify for secured loan consolidation.

The Credit Report: Debt consolidation loans almost always require a good credit score.  People with a good credit rating that are troubled with paying off rising debt should seek out loan consolidation before missing payments and adversely affecting credit scores.