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  • Fast Payout
  • No Fees
  • Secure Application
  • Available 24/7
  • Bad Credit

Finding out the overall loan amount that you need to settle is important before taking out a loan. Remember, not all loans are equal and it’s best to stick to a lender who offers the best deal. That being said, it’s crucial that you know how to calculate the short-term loan that you will borrow or if not, you can always ask the loan provider for assistance.

How To Calculate Interest On A Short-Term Loan?

Step 1

The first thing you need to do is to determine the amount of loan you need to borrow, the interest rate to be charged, and whether it’s simple or compound interest. 

When you say simple interest, it depends only on the principal rate of the advance. Meanwhile, a compound interest depends on the principal rate and the accrued interest on every repayment period.

Step 2

When you have a simple interest, the calculation is easier. All you need to do is to convert the interest rate into decimal form. To do this, get the interest and divide it 100. Next, multiply your answer to the principal amount of the loan then divide the answer you get to 100. This way, you’ll know the exact interest charged to your loan. 

For example, the interest rate is 6% and you borrowed £10,000 for one year. The simple interest rate charged to you is £600.

Step 3

When getting the compound interest of the loan, use this formula: P(1+(r/100)^n. What you need to do is multiply the principal amount (P) to 1 and add the interest rate (convert to decimal form first) and take the answer to the “n” value. Take note that (n) represents the number of years of the advance.

For example, you borrowed £10,000 with 6% for 1 year. The compound interest for this loan is $612.

Emergency situations, unexpected bills, and sudden expenses can often leave you a little short of cash. Oftentimes, you might need to take out a small loan, just enough to cover whatever amount you are short of. Before you apply for a short-term loan, understanding them, how they affect your finances, and what they actually cost you all in all is very important. This helps you make responsible and informed decisions.

Understanding Short-Term Loans

Short-term loans involve borrowing a small amount where it is paid back in a short term, often a few weeks or months, depending on the lenders. Generally, these are unsecured loans where no collateral is involved to make them more accessible to the borrowing public, especially those in emergencies and need some financial boost.

How These Type of Loans Work

Unlike traditional loans that could take years to get paid off, short-term loans are meant to be paid back within a much shorter time. Borrowers that do not want to stay in debt for too long will find this an ideal option. Some providers will allow you to process application online. The applicants state how much they want to borrow and the length of time they agree to repay the amount. You will then be provided by the lender with contractual information including the costs and the repayments and what the consequences are if you are unable to meet the repayments.

Loan Calculations

Remember that borrowing short term still includes interest rates and this must be taken into consideration when calculating how much the loan is going to cost all in all. Interest is the amount the borrower will need to pay back along with the initial loan amount. It is often calculated as the loan’s annual percentage if you were to have paid what you borrow for a one-year period.  Generally, you can expect higher interest rates for short-term and unsecured loans since it is riskier due to the absence of a security.

Interest rates can either be fixed or variable. The fixed ones stay the same all throughout the duration of the loan. The variable ones, meanwhile, fluctuate. Meanwhile, annual percentage rate reflects the costs of the loan over a one-year period. This also includes the accrued interest, fees, and other charges that are involved in the loan’s procurement.

In addition, there is also your credit score. It is part of the loan calculation in the sense that it will affect how much you’ll be allowed to borrow and how much the lenders are likely going to charge you as far as fees go. Your credit report is very much like your CV. Only it contains all financial details about you. You’ll likely get better loans terms and lower fees when your credit rating is good. This is why maintaining a good score can do wonders to your borrowing attempts.

Frequently Asked Questions

Is There Any Complicated Requirements?

No. All you need to provide is your personal information and proof or income or employment verification. Also, you need to include a checking account information where you wish to receive the funds. Since there’s no need for collaterals, you don’t have to provide anything else aside from what was requested on the online form.

How Fast Can I Receive The Funds?

You can receive your money in as fast as 15 minutes. The application process is easy and fast. You will be notified once you are already approved for a loan. After that, the money will be deposited immediately to the checking account that you have provided.

What If I Miss My Payments?

These things could happen. Some lenders can be lenient for the first and second months. However, you should be aware that missing or delaying your payment could affect your credit badly. On top of that, lenders will also incur additional fees or charges for late fees.

What If I Lie In My Application?
It is not recommended for you to lie on your application. Once a lie is caught, you may face serious consequences. The lender has the full right to void your application or charge you additional fees. You could also face jail time if you are caught falsifying documents.

What Is AGuarantor Loan?

Guarantor loans require a guarantor to co-sign for the loan agreement. If the borrower fails to make payment or defaults on the loan, the guarantor takes over and inherits the responsibilities on the loan. It is recommended that the guarantor and the borrower are closely related.

What Is A Payday Loan?

Payday loans are small cash assistance funds that you can acquire easily. Repayment terms are flexible. You can have it tied on your next paycheck or pay it in advance. It is often referred to as cash advance, short-term loans, and cash loans.

What Is ALogBook Loan?

Logbook loans require the borrower to pledge an asset as collateral. In this case, a vehicle. The borrower hands over their ownership of the vehicle to the lender until the loan is fully paid. If the borrower defaults, the lender may seize or sell the asset to pay for the loan.

Am IEligible?

Even if you have poor or no credit at all, you are eligible to apply for an unsecured loan. Our lenders don’t require minimum credit to be eligible. As long as you can pay the loan on time to prevent extra fees and charges.

Payment Method

It is easy to get paid. All you need to do is to provide a checking information during your application. Once you get approved for a loan, you will receive a notification and the money will be sent directly to your checking account. It’s fast, reliable, and incredibly easy-to-use.