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D E F I N I T I O N S
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| Loan
amount owed |
Loan
amount owed is the total remaining balance on a loan. If you are uncertain
of your exact balance, enter an estimate that is as close as possible |
| Loan
payment |
The
payment amount is your current monthly payment. |
| Loan
months Left |
The
number of months you have left to make payments on a loan. |
| Credit
card balance |
The
outstanding balance on your credit card. You do not need to include finance
charges, they will be calculated based on your interest rate. |
| Credit
card rate |
Annual
interest rate you pay on outstanding credit card balances. This calculator
assumes simple interest is charged every month at 1/12th of your annual
rate. |
| Credit
card payment |
Credit
card payments are based on your outstanding balance and annual interest
rate. For this loan comparison, the monthly payment is the amount required
to pay off your credit card in same number of months as your consolidation
loan. Your actual credit card payment may be lower, but will often require
many more payments. |
| Interest
rate |
Annual
interest rate for your new consolidation loan. |
| Term
in months |
Number
of months for your new consolidation loan |
| Up front
costs |
Any
fees you are required to pay up front to receive this loan. This could include
appraisal fees, loan origination fees, etc. |
| Points |
Number
of points paid to for this loan. Points are usually only paid for home equity
loans. |
| Rate
earned on savings |
This
is the rate you would have recieved if you had put your closing costs into
savings. Enter your short term savings rate. For most people this is currently
4% to 5% annually. |
| Income
tax rate |
This
is your combined federal and state income tax rates. It is used to determine
income tax savings when you use a home equity loan to consolidate your debt.
|
| Loan
type |
The
two most common loans types, home equity and personal, differ in fees, rates
and tax deductibility of interest. Home equity loans often have higher fees,
but usually have lower rates and a tax deduction for interest paid. Personal
loans do not have a tax deduction for interest paid, and have a higher interest
rate but often have lower fees. These are important considerations when
choosing a loan. |
| Include
closing costs in loan |
If
you include your closing costs in your loan, your loan balance, monthly
payment and total interest paid will increase. You will, however, be required
to pay less money up front. Including your closing costs in your loan may
be a good option if you do not have funds available, or you can achieve
a relatively high rate of return on your savings. |
