This calculator will compute how much you will need to pay each month in order to pay off a given debt by a selected payoff-goal date.
Meeting Your Financial Goals
Personal debt accumulates over time, funding major purchases like homes and cars, as well as propping-up every day spending power. As mortgages and credit card obligations tax budgets, it is important for consumers to maintain debt management strategies which include ending dates.
Open-ended borrowing allows debt to grow sporadically, using resources as-needed. The revolving debt offered by credit cards and other credit products creates inconsistent balances, and interest-rate calculations difficult to track. It is up to debt holder to manage payback goals, setting realistic repayment expectations. Creditors are in the business for profit, so recommended minimum payment schedules are not always your best approach.
Forms of Credit
There are various forms of consumer credit available; each designated for particular types of purchases and financing needs. Revolving and fixed credit are managed in different ways, so each works best for particular application.
Credit cards are the most widely used forms of revolving credit, illustrating the principles behind this form of lending and repayment. Under revolving terms, purchases are made without cash, using your pledge to repay short term loans instead. The cards are symbolic of your commitment, spreading information to card companies, vendors, and others interested in retaining a share of your money. With assurances in place, you are free to accumulate debt, within limits set by credit-issuing agencies. As purchases are posted to your revolving account, timelines are initiated, governing the way you're expected to pay back the loan.
Each billing cycle provides a grace period, during which payments against your debt can be made. No interest is added to the principal balance of your purchases during this time. Items not covered by payments made during the billing cycle are subject to interest charges as grace periods expire. Charges accrue at different rates, depending on when purchases are made and precise card terms. Debt payoff calculations for revolving credit accounts are not as straightforward as installment debt figures, because ongoing purchases and revolving balances cloud the picture. To make matters worse, credit card companies offer introductory interest rates and other promotional incentives making calculations irregular.
Installment repayment is structured for the long-term, using known principal balances and interest rates reflecting regular payments. Mortgages and other high-limit credit products are paid back using fixed installment schedules. As a result, the wide angle view is sometimes clearer with fixed-term, fixed-payment loans.
Proper budgeting and long-term family considerations rely on accurate loan payoff information, so consumers know when debts drop-off their monthly obligations. Debt payoff goal calculator works the equation backwards, helping borrowers reach established goals for the future. Various scenarios can be easily compared and contrasted by altering calculator inputs, arriving at realistic end-dates for loans.
Accelerated payments, which are applied directly to mortgage principal are one way consumers regain control of their credit destinies. Setting goals first, them running through debt goal calculator scenarios to make sure they are achievable leads to interest savings, and it also lays the groundwork for prudent budgeting and financial planning. Computing how much to pay each month, in order to reach your designated goal, is the first step toward reaching it.