Understanding Your Loan Obligations
Getting a boat comes with a considerable financial commitment. Unfortunately, in most cases, we are unable to afford this. In turn, we rely on boat loans to finance the purchase of our boat.
While this provides significant help, it comes with a wide range of confusion. When getting boat finance, you’re usually unsure about how much you can afford to borrow. In some other cases, when you intend to borrow the whole sum required to buy the boat, you’re usually unsure about whether or not you can satisfy the repayment obligation.
All these can stop you from getting a boat loan and financing your dream boat. Well, you don’t have to bother so much with worries. You can now clarify all these doubts using a boat finance calculator. Generally, it offers clarity so you can decide on whether to borrow or not.
Generally, a finance calculator helps you to determine your financial obligation under a loan agreement that you plan to enter into. It is a tool that provides data in the form of estimates so you can make a well-informed decision when it comes to boat loans.
Types of Finance Calculator
Generally, there are two types of finance calculator that you can maximise to understand your obligation under an impending loan arrangement. They are the loan repayment calculator and the loan borrowing calculator.
This first is a tool that allows a borrower to determine how much they’ll need to repay under the loan arrangement. The second is a tool that allows the borrower to determine how much they can afford to borrow depending on their repayment capacity.
To use this calculator, the borrower will need to input certain information into the calculator. Afterwards, they can click calculate to get the value they can afford to borrow. Relevant information is as follows:
Loan Amount (Only for Repayment Calculator)
This is the amount that the borrower intends to loan under the agreement. This is usually the total sum needed to buy the item or a fraction of it.
Repayment Amount (Only for Borrowing Calculator)
This refers to the amount that a borrower can afford to repay if they take a loan. This is usually based on their income and present expenses. This is the limit that they can afford to spare in repayment of a loan in a particular period.
This is how the borrower intends to repay the loan. Generally, it can be weekly, biweekly or monthly. However, the monthly repayment is more common in the most loan arrangement. Regardless, the repayment schedule will depend on the agreement between the parties.
This refers to how long the borrower intends to spend before repaying the loan. This usually depends on the arrangement between the parties and the type of loan arrangement in question. It can range between a year to three years and, in some cases, as long as seven years.
This refers to the percentage of the loan amount that the borrower will pay as the loan’s cost. This is dependent on the lender in question and the type of loan. For instance, a secured loan will typically enjoy a lower interest rate than an unsecured loan arrangement.
Where applicable, the borrower must also indicate the presence of other terms. For instance, if they plan to use the balloon payment option that allows them to reduce their monthly repayment sum in favour of a lump sum payment at the end of the loan arrangement.
Now, once the borrower provides all these details, all they need is to click “calculate” to get the details of how much they can afford to borrow.