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Financing calculator

What is a financing calculator and how to use it in 2022 in Canada

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What is a financing calculator?

A financial calculator is a tool that performs financial functions commonly associated with business and finance.

It looks like a scientific calculator but has several unique keys not available on other types of calculators. It allows for performing more direct calculations, including functions such as simple interest, compound interest, cash flow, and others.

It has some necessary components that you won't find on a basic or scientific device. A physicist, for example, does not have to calculate bond yields or depreciation, while a financial analyst rarely needs to use sine or cosine.

You can use a hand-held electronic device, an application on the computer or mobile, or an online calculator.

Major types of financing calculators

There is a wide range of different financial calculators designed to solve financial problems and render corresponding services. You could choose any of them to use online for free. It's convenient and easy to receive the data you need without using special formulas.

The major types are:

Auto loan calculator

With this type of device, you could get the auto loan total amount, interest, and cost for a new car you are intending to buy, do calculations specifically for car payments and compare financing options.

Enter new vehicle price or monthly pay, car loan term, interest rate, down payment, trade-in value, sales tax, and additional fees (title, registration or taxes, insurance, etc.). You will get the result and the amortization graph.

Banking calculators

They are investment tools that help to compute future earnings using compound interest formulas.

Fill in initial deposit, term, annual interest, compounding type, and tax rate values. You will get the amount of your savings and could estimate the financial investment.

With savings calculators, you could receive the total savings chart with the interest earned. Just type your initial deposit and monthly contribution amount, term, and annual percentage yield (APY). You could set a goal and save up a necessary amount of money for it.

Credit and debt repayment calculators

A debt calculator is a payment calculator that allows borrowers to understand how long it will take to get out of debt. It is based on how much you borrow and which amount of money you pay every month or week.

Enter your debit balance and interest rate for each of your debts, and the amount of money you are able to pay monthly. You will get the total interest charges and the period of time you have to pay it back.

Some tools will provide you with different methods to get to a debt-free life and a full report including exact payoff dates and the loan amortization schedule.

Debt consolidation calculators help a borrower understand whether they should unify all the loans and debts into one new loan to repay the existing loan. Fill in the credit card balances and rates, installment loan balances, rates, and payments.

You will get the details of your consolidated personal loan: interest rate, term, and savings rate. It's a good idea to understand how your monthly payment will change but ensure to include all costs and fees which may be paid.

Note: All loans are subject to credit approval, to borrow you should go through the standard application process which usually requires a credit check.

Credit card calculators

Credit card calculators are used to calculate the interest charges on the credit cards. Input balance, interest rate, minimum payment, or period of time you want to pay the money back. You will get a result and a balance/interest graph.

Also, you can use a credit card minimum payment calculator to determine how long it will take you to pay off if you make only the lowest monthly payment.

Enter balance, rate, and minimum payment amount in percentage to get the minimum payment amount in $, total payments and the time needed to pay it off, and the graph of balance in $ to period in years.

Home and mortgage calculators

Mortgage calculators help estimate the monthly payment along with other financial costs associated with mortgages. There are options to include extra payments or annual percentage increases of common homeownership-related expenses.

Mortgages usually include the following key loan details that are components of calculation: home price, down payment, loan term, fixed interest rate or variable interest rates, costs associated with homeownership and mortgages like taxes and insurance. You can input your values and calculate the total and monthly payments, and also see the loan amortization schedule.

Use the tool to price different variants. You might need to adjust your down payment to keep your monthly repayments affordable, change your fixed interest rate to the variable or take a Home Equity Line of Credit.

Insurance calculators

Using Life insurance calculators you could understand how much coverage you need in your situation. Answer the questions like how much annual net income needs your survivors, and get the amount of insurance and its explanation.

Annuity calculators are useful to find out how much money you could get from the principal amount, how long can you get it or how much should you deposit to generate a withdrawal sum. Input the two of three values plus the intervals between withdrawals and annual growth rate to get the answer.

Personal loan calculators

Personal loan calculators can help overview monthly payments and the total costs for the whole period you want to borrow money.

Input loan amount, interest rate, insurance, loan term, and fees. You will get the real cost of the loan, which could be higher than advertised. Also, you could see how much total interest you will pay, the loan amortization graph, and the real annual percentage rate (APR) for the loan.

If you use the real APR for loan comparison you could easily understand which lender or loan option suits your financial situation.

Why do you need a financial calculator

The most important about financial calculators is that you don't need to plug in any financial formulas: the data is already pre-loaded into the device. This device does all computing automatically, so you save your time and work more efficiently.

Some financial calculators also include the ability to graph financial calculations. The graphs, diagrams, and charts help to visually analyze the problem. It's extremely beneficial for learning purposes, in college accounting, business, and statistics classes.

For any business student, it is an essential device to go through the course.

Also, financial calculators are popular among people who want to borrow and loan specialists. It's important to review all loan details, especially if you have a bad credit history or it is far from excellent credit.

It's also useful for planning your monthly expenses and savings, setting and achieving financial goals, and helping potentially make better financial decisions.

Typically finance calculators allow for the calculation of the future value (FV), periodic payment (PMT), interest rate (I/Y), number of compounding periods (N), and PV (Present Value).

Financing calculators are widely used to:

How to use a financing calculator

Basic functions – addition, subtraction, multiplication, division – and equals look the same as the buttons on the basic and scientific calculators.

You could see other keys that are unique to this type of calculator at the top of your device. Each button is marked with certain letters (N, I/YR, PV, PMT, and FV) corresponding with the function they provide.

Also, you will see the «Shift» button that is used to turn on an alternative function, because many of the keys have more than one purpose. The additional features are usually written on the top of the key.

Pressing the PMT button calculates the payments per period.

The interest rate per period button may be labeled as I% for «interest percentage» or I/Y for «interest/yield».

The N button is pressed when you need to specify the number of periods — the number of payments you would make in a loan.

For example, a 3-year loan has 36 payment periods. Input the number of periods yourself or calculate the number of periods: «3 x 12 = 36» before pressing the N button.

Before entering the interest rate, be certain that you're using the rate being charged for each period. If you are paying monthly, use a monthly interest rate, not the annual rate.

You can enter the interest rate per period directly or calculate it before pressing the I% button.

Use the PV and FV buttons to enter the present or future value of a loan or an investment. They are used together to compute the future value of a loan or investment based on the present value.

When you want to select a field to compute, tap the compute button (CPT) first.

It is pressed before calculating a payment, number of periods, present value, future value, and interest rate period.

For instance, if you tap the CPT button, then press the PMT button, the value for the payment will be calculated.

Example:

You need to calculate the future value of the $1,000 lump sum investment, with a 10% compounding interest paid annually for 5 years.

  1. Enter the number of periods. Press 5 and the N button.

  2. Enter the interest rate. Input 10 and press the I% button.

  3. Enter the present value. Input 1000 and press the PV button.

  4. Press the CPT button and then the FV button to compute the future value. The answer should be $1,610.51.

  5. Double-check your calculations, especially within the first days of usage.

Comparing lenders using a financing calculator

Financial calculators allow borrowers to estimate annual percentage rate, monthly payment, total interest, and compare personal lending products to find the most affordable loan or lender with the best options.

To calculate loan payments on a financial calculator, you will need the values of the loan amount, interest rate, term of the loan and payment schedule.

For example, there is a $10,000 loan for 5 years at 5% annual interest.

  1. Enter 10000 and press the PV button.

  2. Enter 5 / 12 and press =

You will get 4.1666667, which is the annual interest rate divided by 12 months. Press the I% button to enter the interest rate.

  1. Enter 5 x 12 =

You will get 60, which is 5 years of monthly repayments. Press the N button to enter 60 as the number of repayments.

  1. Press CPT and then press the PMT button. The monthly payment for your loan is $188.71.

Calculate the monthly payment amount for other loans to compare them. The charges like administration fees, other costs, and interest rates may vary. Pay attention to your payment frequency (monthly, semi-monthly, bi-weekly, etc. )

Also, you can calculate the annual percentage rate for each loan, which will allow you to analyze the loans with different interest rates and fees, and determine the true loan total cost.

If you use an online loan comparison calculator, you only need to enter the data as loan amount, interest rates, term, amortization, fees, and closing cost for each loan you want to compare. You will get the monthly repayments and APR, written and visualized by the diagram to help you make a decision.

Can you use a TI 84 as a financial calculator?

Yes, you can. It has financial functions: press «Apps» and choose «1: Finance».

The first tab, Calculate (CALC), contains all the functions to solve financial problems.

How do I make a financial calculator in Excel?

  1. Create a table with all necessary information (for example, RATE, PMT, FV, etc.)

  2. Enter your data.

  3. Enter the formula. (for example, present value formula: = PV(RATE, NPER, PMT, FV).

  4. Change the values in the formula to the cells that correspond with the data. (in our example — RATE, NPER, PMT, FV to c3,c4,c5, c6).

  5. When you’ve selected the relevant cells, you could tap «enter». The cell («PV» in the example) will now show the needed amount.

What is a basic financial calculator?

It's a tool working as a pocket financial calculator with basic arithmetic functions and major financial functions like present value, future value, payments, or number of periods.