How to properly calculate the overpayment of the loan and interest?

The credit system today occupies an important place in the life of the population throughout the country. Only some people have never encountered it, but they also do not deny the possibility of this in the future. Because of this it is useful to know how to properly calculate the overpayment. It is a real monetary sum, which is added to the total debt, helping banks to receive income from loans and forcing the client to give extra money.

What is included in the loan amount?

Large and small financial organizations constantly offer loans to the population on various terms. Only so far, many of them continue to hide the true figures that customers face. This question occupies all, as there are a lot of examples when at the first appeal there are interesting offers, and at the time of signing the contract the amounts vary greatly. Moreover, the bank turns out to be right, as certain parameters, unknown to borrowers, operate. What is included in the full amount of the loan?

1. The amount of the principal debt;
2. Interest of overpayment for the whole period;
3. The cost of servicing the account and issuing plastic cards;
4. Additional fees and commissions.

No one without special education will be able to cover a complete list of subtleties affecting the full amount. This makes it necessary to consider separately some of the parameters that are most significant. Such a step will open the veil of secrecy concerning the actions of financial organizations.

EPS

Start with the effective interest rate (EPS). Its size is dictated by the Central Bank of Russia, forcing credit institutions to save customers from unnecessary overpayments. Usually people pay attention only to bright advertising slogans promising minimum interest on the loan, but do not understand that each bank has its own framework.

EPS is a complex indicator, the calculation of which requires deep knowledge, so it is practically not used in everyday life. Nevertheless, the effective interest rate is not based on the profitability of a loan, but on the percentage of unreturned cash. If the bank constantly has losses, specialists have to raise rates so as not to lose their own assets. It is this feature that perfectly describes the huge overpayments in small financial organizations, where clients do not undergo due verification of identity in the security service.

CPM

CPM, or the payment of an insurance company, is also included in the total loan amount. Only it is calculated on a complex principle, which makes one think about necessity. The fact is that after signing the contract, borrowers often agree with certain insurance conditions. Only they make you instantly pay a lot of money, although it does not like anyone. It is worthwhile to understand that only with large amounts banks are forced to agree to such a step, and in other cases it can be abandoned.

Other hidden charges

Before drawing up a loan, almost every person thinks only about receiving the necessary amount of money. At the same time, no one pays attention to certain clauses of the agreement, where additional payments for the use of the loan are indicated. However, a few years ago they were the main problem, which forced for a couple of years to increase the main debt several times. What are we talking about?

• Payment of submission of documents;
• Payment of credit agreement;
• Payment of credit card issue;
• The cost of servicing the account;
• The cost of compulsory insurance;
• Payment for operational support.

Summation of all these points significantly increases the CPM, which means an increase in monthly payments. A few years ago, the legislation of the Russian Federation forced banks to make the contracts transparent, after which the borrowers could see what money they were giving in vain. Although this did not in the least affect the popularity of the credit system in a country where material prosperity remains too low to receive all the benefits of civilization.

Commissions not included in the CPM

There are also certain commissions that are not taken into account during the calculation of the CPM. They are optional, but still taken into account in the clauses of the contract. They can be listed in order to protect a person from surprises.

• Overpayment for early repayment of the loan;
• Payment for cash services or withdrawal of funds through ATMs;
• Penalties for exceeding the overdraft;
• Commission for the transfer of credit to other organizations.

These items are not used by all banks, so in many cases they influence the choice of a suitable offer. Previously, their assessment has never bothered borrowers, but now the difference in the amounts is significant. For example, withdrawal of funds from a credit card in an ATM of a foreign bank often forces you to give up to 10% of it. Accordingly, with the withdrawal of 30,000 rubles, a person will receive only 27,000, the rest will go to pay the commission.

How to calculate interest on a loan?

Only the representatives of banks are engaged in calculations of EPS and CPM. People also need to know in advance the approximate overpayment. Such a calculation will not yield real results, but it will allow to clarify how the difference varies depending on the chosen term or the proposal of the financial organization.

It is important that the calculations are easily carried out at home without preliminary preparation and detailed study of the credit system. Based on this particular data, brokers often offer borrowers to choose the best option to spend a minimum of time without going into details.

Initial data

For the calculation of percentages, several initial data will be required.

• PP (interest of overpayment);
• SC (loan amount);
• PS (interest rate);
• M (number of monthly payments);
• OSS (balance of debt under the loan);
• SDP (total amount paid);
• DP (additional payment).

Each item should be understandable to the potential borrower, but still one should be considered in more detail. Often people do not understand why the proposal specifies the annual interest rate, but the total monthly payments are used in the calculations. The reason for this is that far from always when the contract is drawn up, full years are indicated. This fact greatly complicates the calculations, giving a more or less real picture of overpayment interest.

Formula

The formula for calculating the percentage of overpayment is not that complicated.

PP = SK / 100 * PS / 12 * M

As a result of simple calculations, any person will know what money will be paid in interest. It is worth recalling that in this case it is not a PUK, but only a small fraction of it. In many cases, only personal communication with a consultant in the bank office gives a real picture. Nevertheless, you should spend a couple of calculations, showing the true benefits of this formula.

Initial data: SK = 30000; PS = 29%; M = 12 and 24, that is, it takes the calculation of the percentage of overpayment for 2 terms: for registration for 12 and 24 months.

PP = 30000/100 * 29/12 * 12 = 8700

PP = 30000/100 * 29/12 * 24 = 17400

The obtained data show that when choosing a loan agreement for 2 years, a person will have to give 2 times more percent. On the basis of this, one can freely talk about the profitability of a proposal, if one does not pay attention to other payments.

With early repayment

It would seem that you can immediately find out what money will be required to return the full amount of the loan ahead of schedule. Usually people simply sum up the remaining months, but they do not even realize what mistake they make. They need to know exactly how monthly payments are made.

1. Annuity payments;
2. Payments on the actual balance.

The first method of monthly payments is based on the preliminary drawing up of a schedule for the return of funds to the bank. At the same time, the amounts remain constant throughout the term, which seems to be the best option for the person. However, the second method is based on a regular recalculation of interest, depending on the reduction of the principal amount of the debt. In this case, with early repayment, a categorical difference appears, based on the ready-made formula for calculations.

OSS = SC-SDP-DP

The fact is that PSD varies greatly, because annuity payments mean the initial payment of interest, and then gradually the increase in the withdrawal of money from the total loan amount. Accordingly, after signing an agreement with the bank on similar terms, it is better not to talk about his premature payment. As a result, you will have to spend a lot of money without getting any tangible difference, which makes such loans the most profitable for financial organizations.

A sober view of the loan

The credit system has spread widely across the whole of Russia, but people are just beginning to learn to evaluate the proposed conditions after learning how to properly calculate the overpayment. This is not so simple, because only a sober assessment allows you to consider the small "pitfalls" in the contract. They too often turn into a problem, so you should list a few basic nuances that will help a person.

1. Interest rate;
2. Additional commissions;
3. Type of payment;
4. Insurance;
5. Loan terms.

A simple borrower is immediately faced with such a large list of difficult, but do without it is unrealistic. Usually minor nuances are the most serious, so they should pay special attention.

Calculate overpayments

However, potential borrowers still continue to think only about overpayment, considering it a value that is dependent only on interest rates. Above are the factors that will help change the opinion of the population, but still it is worth giving a clue.

True overpayment for any loan without the professional assistance of a bank representative is never specified. It is impossible to know the CPM, as the formula for its calculation is not disclosed by financial institutions. As a consequence, it is better to find out what money will be given after signing the contract, when you visit the office. By requesting the necessary data, one can subtract the loan amount directly from the mind to see the real costs. This action is the responsibility of the consultants, so it is not so difficult to evaluate your own step.

Optimal choice

Finally, we should talk about the optimal choice. It must be based on one's own preferences. For example, a borrower may know that in a few months it will be easy to repay a loan. In this case, the bank is suitable, where there are no commissions for early repayment.

Also it is worth to give up too long terms. Yes, they significantly increase the percentage of overpayment, but this is not the only nuance. From a psychological point of view, such a choice is optimal for a person, since after the mid-term transition, his mood begins to improve. Because of this mortgage to this day remains problematic for young families. The first years of life are always not easy, and when you have to give a perceptible share of the monthly income every month, scandals gradually appear.

The use of a credit system in Russia is convenient, but it remains opaque. Banks in no way hide their commissions towards clients, but people push themselves into the debt hole. They do not have the proper knowledge, so they often sign contracts on unfavorable terms. So in any case, first you need to clarify all the details, then to calmly make monthly installments, without worrying about excessive overpayment.