Simulating a personal loan is a fundamental operation if you want to know the costs that will be incurred when applying for a loan. The simulation allows in fact to know in detail the amount of the installments and their distribution for the duration of the loan.
How to simulate an amortization schedule
Knowing the details of the installments for the duration of the loan means simulating the repayment schedule . The plan allows to know how the installments will be distributed over time , what will be the amount of residual amount (ie the sum given by the capital plus interest) to be returned after each installment and the composition of the installment itself. As we have explained in the guide concerning the calculation of the installment of a personal loan, in fact, the installment consists of two shares: the principal amount and the interest portion . In fact, even if the installments always have the same amount , their composition varies, with the principal amount increasing in installment over time, while the interest rate decreases proportionately as the installments are paid. To simplify, we can therefore say that most of the interest will be paid in the first half of the loan period, while the second part will be devoted in greater part to the return of the capital received.
The calculation of the depreciation plan independently is rather complex; in order to avoid errors and to know the hypothetical plan easily, it is advisable to use an online calculator , an instrument that can simulate in a few seconds.
What data to consider to simulate a personal loan?
The essential data for the simulation of a personal loan are few and very simple to identify. First of all it is necessary to know the amount to be requested, net of interest. The second parameter to be considered concerns the interest rate applied (possibly the APR , the rate that makes it possible to compare personal loans more effectively with each other). Finally, it is necessary to indicate the duration of the loan.
Please note that online simulators consider the application of the French amortization plan for the calculation. However, there are other types of amortization; however, consider that in most cases this is the type used for personal loans granted in Italy. In the event that the financial product has different characteristics, this peculiarity is usually specified.
What data to consider for savings on a personal loan?
The simulation of the amortization plan helps to understand what the cost of the personal loan will be for those who have subscribed it. In the simulation, the main data to be referred to is the amount of interest , ie the additional amount that will have to be paid over time for the loan. The comparison between different personal loans, possibly made with an online comparison tool, already makes it possible to identify the most convenient loans based on the APR rate applied. However, the simulation of the repayment plan, makes tangible the actual amount of interest and the real amount of the installment.
When an installment is too high?
An important aspect to consider in the simulation of personal loans concerns the actual amount of the installment. It is always advisable to take out a loan presenting a lower rate compared to their ability to pay, so as not to be in trouble in case of unforeseen releases or decrease even temporary income. Please note that an installment is usually considered sustainable if it does not exceed one fifth of the average monthly revenue. This parameter, however, is indicative, as it is necessary to consider also its own situation of previous indebtedness , ie the presence of any other installments to be paid.