What's good for the bank is bad for the borrower
Situations often arise when borrowers, for some reason, are embarrassed to clarify with bank employees all the details of the loan agreement, thereby doing themselves a “disservice.” After all, a banking institution will never operate at a loss. Take, for example, the problem of how to correctly calculate interest on a loan.
The loan manager will be happy to provide a payment schedule with the specified amounts, but will refuse the offer to show the formula. Like, the computer calculates everything itself. But the banking program produces results that are beneficial to the bank. In order to understand for yourself, you need to remember that there are two options for repaying the borrowed amount: in equal installments every month and charging interest on the actual balance monthly.
If the terms of the loan agreement indicate that the loan is repaid every month in equal installments (both interest and part of the loan are taken into account in the obligatory payment), the so-called “annuity” formula must be used for the calculation: Payment = (loan amount * interest rate / 12) / (1-1/(1+ interest rate/12) * number of months). If we substitute conditional figures into the formula: loan size - 200 thousand rubles, interest rate - 21%, it turns out that the borrower will give the bank 18.62 thousand rubles every month. In this case, the total cost of the loan will be equal to 223.48 thousand rubles.
With this scheme for calculating interest amounts for using a loan, you need to remember that they are recalculated monthly, as the size of the “loan body” changes. Payment = (loan amount/number of months) + debt balance * interest rate / 12. If we substitute the above values into the formula, it turns out that in the first month the borrower will pay 20.16 thousand rubles to the bank’s cash desk. However, in the second - already 19.87 thousand rubles. And the total amount will be 222.75 thousand rubles. Thus, calculations using the second formula are more preferable for the client. Realizing this, many banks do not leave the right to choose, imposing an annuity system.
As noted above, banks quite often play tricks, focusing the borrower’s attention on some sides of the transaction, while carefully keeping silent about others. In this case, the client agrees with all clauses of the contract. For example, the notorious commissions paid by the client for a bunch of different operations can be taken into account in the loan amount, increasing it. Or insurance. She also plays against the client. Moreover, the latter “feeds” not only the bank, but also the insurance company. And there can be many such nuances.
Very simple. Read the contract carefully, find out from the manager about all the pitfalls (don’t be shy to ask) and calculate the amounts yourself using the formulas given in the article. The work only takes a couple of hours, but you can save a lot of nerves and time in the future.
Obtaining a loan from financial institutions has become a fairly common procedure for most Russians. But still not every potential borrower can adequately assess the entire financial burden that he is shouldering. Hence, the percentage of arrears is huge, by world standards - over 17% of debtors have delays in payments exceeding two months.
But in order to determine the actual size of monthly payments, you just need to take a calculator and spend a little time on calculations. This will make it possible to find out the real overpayments for a particular banking offer. However, not many Russians know how to correctly calculate bank interest on a loan.
From a financial point of view, a bank loan is divided into three main parts:
- Body of the credit amount.
- Commission fee.
- Interest rate.
Everyone knows that borrowing money from a bank is not at all the same as borrowing a certain amount from a relative or neighbor “before payday.” Banks are called commercial organizations because they require “remuneration” for their services in the form of commissions and interest. In this sense, money acts as a commodity that brings profit to its owner as a result of its turnover.
The term “body of the loan amount” refers to the size of the loan itself, which the client received in hand. Commissions and interest are calculated on this amount, and in case of delay - penalties.
Example. The borrower received a loan of 20 thousand on January 1. A month later, according to the payment schedule, he made a payment of 2 thousand. Of these, 1.5 thousand went to repay the principal amount, and 500 rubles - to service interest. Accordingly, by February 1 the amount was 18.5 thousand, and interest for the next month will be accrued on this amount. Commission is a part of payments made in favor of a banking organization in addition to accrued interest.
In this case, two types of charges are used:
- For the entire amount that the borrower originally borrowed.
- For the remaining balance of the loan.
In numbers, the financial difference is as follows. A fixed commission amount of half a percent on a loan of 20 thousand will in this case be 100 rubles: 20,000 x 0.5% = 100. If the commission fee is charged on the balance of the credit body, then its size will decrease every month. Of course, provided that the borrower repays his bank debt on time. Commissions are calculated on the last working day of the current month.
Recently, a number of banks, in the fight for clients, have been reducing, or even completely eliminating, charging commissions. In this case, the only overpayment for a punctual borrower will be the interest rate. Unlike commissions, interest is always calculated on the balance of the debt. Accordingly, the faster the debtor pays off the principal debt, the fewer overpayments he has to make.
Different commercial structures offer different rates - from 12% per annum for large federal banks (Sberbank, VTB, Rosselkhozbank) to 2 and even 3% per day for microfinance organizations. The calculation in this case is carried out as follows. Let's say a client took out a loan of 20 thousand at 15% per annum. Consequently, in the first month his overpayment will be 246 rubles (20,000 rubles x (15%: 12 months)).
However, the example given is a standard or average formula for calculating annual interest on a loan. In fact, there may be several payment options.
The most common method of repaying a bank loan used by credit institutions today is through annuity payments. This method involves paying off the debt in equal shares, divided over the entire term of the loan agreement. Moreover, initially the majority of the payment structure consists of commissions and interest. By the middle of the payment period, they are compared, and at the final stage the debt body is already repaid.
With the annuity payment method, the size of the principal debt practically does not decrease throughout the first half of the lending period. This situation is very beneficial for the bank: if the client suddenly decides to repay the loan early, then even at the end of the contract, the amount of the principal debt will be very significant. And the interest paid in advance, for the entire payment period, in this case remains with the bank.
The annuity payment is calculated using the following, rather complex, formula:
MP = TK x (P + (P: (1+P) x (D – 1)),
Where MP is the monthly payment; TK – loan body, P – interest rate based on one month; D – length of the loan term.
You can calculate what part of the payments goes to paying off the debt, and what part goes to paying off the accrued interest, as follows:
PM = TK x Pg: 12,
Where PM is the interest accrued for the month; TK – the remaining loan body at a given time; Pg – annual interest rate. Next, to find out what part of the payments goes to repay the debt (Pt), we remove the monthly interest (Pm) from the total monthly payment (MP):
Fri = MP – PM.
For clarity, let's give an example. The loan amount is 10 thousand, the interest rate is 15% per annum, the term of the loan agreement is 12 months. That is, the monthly interest rate will be equal to 15%: 12 months: 100 = 0.0125. We substitute the available values into the annuity payment formula:
10,000 (0.0125 + (0.0125: (1 + 0.0125) x (12 – 1) = 1,483 rubles. 3 kopecks monthly payment.
This payment method is used quite rarely by banks today. The first sign of this method of calculating payments is the monthly decreasing amount of monthly payments. With differentiated payments, the principal debt is reduced every month by the same share, and interest charges are made on the remaining amount. As a result, the largest payments are made in the first months of the payment schedule, and the smallest - at the end of the loan term.
This type of loan settlement is used less and less by commercial organizations. The reason is quite clear - such a scheme is less profitable for a commercial organization than an annuity payment. The faster it is repaid, the less interest is charged on it. How to calculate loan interest in this case?
In this case, payments are calculated using a simpler and more understandable formula, which also plays into the hands of bank clients. Interest is accrued monthly on the loan body, each time less due to a decrease in the amount of the principal debt. Many banks offer special online calculators on their official websites. With their help, you can calculate the size of the final overpayments, depending on the loan amount and the interest rate.
In addition to the interest rate and commission charges, penalties may also be the reason for overpayment on the loan. Fines are assessed by the bank, in accordance with the agreement, for late payment. The agreement must clearly state the amount of penalties and the form of their calculation. They can be accrued monthly either in the form of a clearly fixed amount, or in the form of an interest rate on the balance of the debt, or on the original size of the loan.
All details of charging a penalty for violating the payment schedule are specified in the loan agreement. Another thing is that such important details are printed in small print or hidden on the last pages of the document. This is done so as not to scare off the client in advance. But in case of delay in monthly payments, the bank immediately puts this clause of the agreement into effect, adding additional penalties to the total amount of debt.
If the fine is calculated as a fixed amount, then calculating overpayments is not difficult. It is enough to multiply the number of months of delay by the agreed amount of the fine. It is more difficult to calculate the amount of payments for penalties if they are calculated as a percentage of the remaining amount of the loan. To do this, you will have to calculate the balance of the principal debt, and only then find the penalty interest.
In this case, you can only receive an approximate amount; the final amount of payments may be influenced by a number of additional factors.
How to calculate the loan amount and monthly payment?
Counting your own money is not a sign of suspicion, but a healthy approach to business. Calculate how and in what amounts you will repay the loan so that, if necessary, you can competently present your arguments to the lender.
The rapid growth in the popularity of all types of lending over the past decades has forced bank clients to understand the basics of banking. At the very least, the consumer should know everything that concerns their own funds invested in a bank deposit or borrowed (credit) funds borrowed from a bank in detail, since a healthy distrust of other people’s opinions regarding one’s own money is a positive trait.
So, suppose you took out a loan and, naturally, you want to clearly understand how and in what amounts you will repay it. You can, of course, use the services of bank calculators, of which there are plenty on the Internet. But, firstly, the network is not always at hand, and, secondly, let’s remember the main thing: you should not only know everything that concerns your money. You must understand this so that, if necessary, you can competently present your arguments to the creditor.
So, the “three pillars” of any bank loan:
- The amount of the loan issued by the bank;
- Loan repayment period;
- Loan interest rate.
The amount of interest on the loan is determined from the balance of the amount that remains to be repaid, multiplied by the loan interest for the term in relation to the year. For clarity, let’s look at calculating the amount of interest on a loan using a specific example. Suppose the bank provided a loan in the amount of 12,000 rubles for one year at 20% per annum.
If the loan is not repaid throughout the year, then the amount of interest will be 2,400 rubles. (20% of 12,000 rubles). However, banks, as a rule, provide for loan repayment in monthly equal installments in loan agreements. The amount of interest in this case is determined monthly from the remaining loan amount after repayment.
For example, loan repayment begins on January 1. January has 31 days. The amount of interest on the loan for January will be 12,000 × 31 × 0.2 / 365 = 203.84, where:
- 12,000 – the amount of the unpaid part of the loan at the time of interest calculation;
- 31 – number of days in a month;
- 365 is the number of days in a year.
So, in January we must pay the bank 1,000 rubles of the actual credit part (“loan body”) and 203 rubles. 84 count interest on the loan.
Accordingly, in February the loan payment calculation will look like this:
11,000 × 28 × 0.2 / 365 = 168.77 rubles, where
- 11,000 – the remaining portion of the loan amount after 1,000 rubles were paid in January;
- 28 – number of days in February;
- 0.2 – interest on the loan (20%);
- 365 is the number of days in a year.
The full payment amount for February will be 1,000 rubles (“loan body”) and 168.77 rubles. interest on the loan. The following months are calculated similarly. Some banks prefer an average monthly interest payment on the loan. Then the entire annual interest amount is added up and divided by 12 (the number of months in a year). The average amount of interest is the same and is paid monthly along with the “loan body”, remaining constant throughout the year.
Sometimes, when you need, in the absence of a calculator, to very quickly calculate the amount of interest on a loan, you can use the following methods:
Fastest and most approximate
Loan amount x number of years on the loan + half the interest on the loan + 1–8% of the resulting amount. We take into account that the longer the term, the lower the percentage that should be added. In the example we have already considered earlier, the calculation will look like this: 12,000 × 1 × 20 / 2 = 1,200, to which another 8% should be added
More accurate and labor-intensive
We determine the monthly repayment amount of the “loan body” (in our example it is 1,000 rubles), add to it the amount of the entire loan and divide by 2 (12,000 + 1,000) / 2 = 6,500. Multiply the resulting number by the number of years on the loan and for interest rate: 6,500 × 1 × 0.2 = 1,300 rubles
You can make calculations easier by using a mobile phone calculator. However, if you are interested in lending, be sure to take into account possible additional conditions of the bank, which can often significantly (sometimes more than the interest rate for the loan) increase the amount received by the bank from the borrower.
Most often, they are presented as a fee for servicing a loan agreement and can be paid either one-time with a certain percentage of the loan amount, or monthly, although sometimes both are required. To avoid unexpected additional costs, be sure to carefully study all the terms of the loan agreement.
You can apply for a loan online on the website of almost any bank. The convenience for the client is obvious here - filling out an application on the website without visiting the office saves your time. This is also beneficial for banks, as it saves employees time. The bank can collect all the necessary information about a potential borrower and make a decision on loan approval without the client visiting the office. Documents and certificates can be provided electronically. A personal visit will only be necessary to provide original documents and sign the contract.
Calculate your loan yourself
The loan calculator with early repayment is designed for independent online calculation of loan parameters, such as the amount of the monthly payment and the total overpayment on the loan based on the amount desired by the borrower and the loan term, as well as the interest rate. After completing the calculation, you will receive a detailed payment schedule containing details of each monthly payment, namely: the total payment amount, how much of this amount goes towards paying off interest and how much towards repaying principal, and the remaining principal balance.
Using an online calculator to calculate a loan is very convenient. You can carry out any calculations without resorting to the help of specialists.
Interest rate
The interest rate is the cost of the loan offered by the bank. Each bank has its own lending programs for the population and offers different interest rates. Even within the same bank, the interest rate can vary greatly under different conditions. It may depend on factors such as the age of the borrower, his credit history, the purpose of the loan, the loan amount, and the presence of guarantors. It happens that banks provide their regular customers (for example, debit card holders or people who have already used a loan) more favorable lending conditions than customers “from the street”. You can find out the current interest rates of banks on the websites of these banks.
Monthly payment type
Another parameter that influences the calculation result is the type of payment. An annuity is a payment in which the amount of the monthly payment remains unchanged throughout the entire loan term. Differentiated is a type of payment in which the amount of the monthly payment decreases towards the end of the loan term. This happens due to the fact that the share of the principal debt remains unchanged, and the share of interest decreases every month, as the total amount of debt decreases. The most common type of payment is the annuity.
The loan calculator is convenient to use to compare results for different initial values, thus choosing the optimal loan terms for yourself. The ability to save the results will further simplify this process.
A banker is a merchant. He buys money interest on deposit at low price and sells them loan interest at a higher. The resulting difference constitutes his income.
There are more people who want to borrow than those who want to deposit money at interest. Therefore, commercial banks can obtain loans from TSB RF Central Bank of the country. As of September 2016, under "key rate"
(aka “refinancing rate”) 11% per annum. It is logical to assume that it is not very profitable for commercial banks to accept contribution deposits with an interest rate above this value. An exception can be made only for VIP clients - owners of factories, newspapers, and ships.
For others, a high deposit percentage may be a marketing ploy, since it will be compensated through various commissions.
How to calculate the amount that the depositor will receive if interest is accrued at the end of the deposit period
Annual deposits
A person opened a deposit of 5,000 rubles at 9% per annum for 2 years:
in a year: 5000 rubles is 100% x rubles is 9% x=5000*9/100=450 rubles in two years: 450 rubles for 1 year x rubles for 2 years x=450*2/1=900 rubles 5900 rubles the investor will receive at the end of the term * What is 100? - “A percentage is a hundredth of a number.” Cm. .Monthly deposits
A person opened a deposit of 5,000 rubles at 9% per annum for 3 months:
in a year: 5000*9/100=450 rubles in 90 days: 450 rubles for 365 days x rubles for 90 days x=450*90/365=110 rubles 96 kopecks 5110 rubles 96 kopecks the investor will receive at the end of the term * 365 is . In a leap year there will be 366. .Deposit interest calculator
| date | coming | amount on account |
|---|---|---|
| 5000 | 5000 | |
* interest begins to accrue from the day following the day the money is received by the bank, that is, from (Article 839 of the Civil Code of the Russian Federation).
How to calculate the profitability of a replenished deposit with interest payment at the end of the term
The interest rate on replenished deposits is lower. This is explained by the fact that during the term of the deposit agreement the refinancing rate may decrease and the deposit will no longer be beneficial to the bank. That is, the bank will have to pay interest on the deposit higher than the interest that creditors will pay the bank.
Exception: if the deposit rate depends on the refinancing rate. In other words, the refinancing rate increases - the interest on the deposit increases, the refinancing rate decreases - the interest on the deposit decreases.
An example of calculating interest on a replenished deposit
A person opened a deposit of 5,000 rubles at 9% per annum for 3 months. A month later, he deposited another 3,000 rubles:
in a year: 5000*9/100=450 rubles in 30 days: 450*30/365=36,986 rubles balance after 30 days: 5000+3000=8000 rubles recalculation for the year: 8000*9/100=720 rubles for the remaining 60 days: 720*60/365=118.356 rubles Total interest: 36.986+118.356=155 rubles 34 kopecks The total amount that the investor will receive: 5000+3000+155.34=8155 rubles 34 kopecksDeposit calculator with replenishment
| contribute | ||||
| date | coming | consumption | amount on account | |
|---|---|---|---|---|
| 5000 | 0 | 5000 | ||
| 0 |
How to calculate interest on a deposit with capitalization. What is this: “deposit capitalization”
Interest may be paid:
- total amount at [ ending | termination | on the day of signing] deposit agreements.
- the total amount is divided into parts and paid monthly, annually. The client can choose the most suitable option for himself:
- at the frequency specified in the agreement or less frequently, come to the bank and withdraw the amount of accrued interest or automatically transfer it to a plastic card. That is, “live on interest.”
- capitalization of interest, also known as compound interest add accrued interest to the deposit balance. Just as if you came on the day of interest accrual, withdrew the amount of interest and replenished the deposit with it. The deposit balance increases and it turns out that interest is accrued on interest. Deposits with interest capitalization should be chosen by those who do not plan to withdraw the interest amount in installments. This advice does not apply to deposits where, under the terms of the agreement, partial withdrawal in the amount of capitalized interest is possible.
Formula for calculating deposit with capitalization
S = s × ⎛ ⎝ 1 + P×d 100×D⎞ ⎠ n S - the total amount that the investor will receive, s - the initial amount, P - the annual interest rate, d - the number of calendar days in the period, D - the number of days in the calendar year, n - the number of capitalizationsAn example of calculating interest on a deposit with capitalization
On January 1, a person opened a deposit with a capitalization of 5,000 rubles at 9% per annum at 6 months 180 days. Interest is calculated and capitalized on the last day of each month.
5000 × (1 + 9/100 × 30/365)^3 × (1 + 9/100 × 28/365) × (1 + 9/100 × 31/365)^2 = 5000 × 1.02235634396 × 1, 00690410959 × 1.01534609946 = 5226.06 Refer to the table above:
- There will be 30 days in three months: January, April, June.
- There can only be 28 days in one month - February.
- 31 days will be in March and May.
How to check the correctness of interest calculation on a deposit, accurate to the penny
The technology malfunctions. When you have an account statement, it is not so difficult to manually recalculate the interest due.
Example: on January 20, a person opened a deposit with capitalization once a quarter for 5,000 rubles at 9% per annum at 9 months 273 days. On March 10, I topped up my account with 30,000 rubles. On July 15, he withdrew 10,000 rubles. April 20, 2014 and July 20, 2014 fall on a Sunday.
20.01-10.03: 5000*9/100*49/365=60,41 10.03-21.04: 35000*9/100*42/365=362,47 20.01-21.04: 60,41+362,47=422,88 21.04-15.07: 35422,88*9/100*85/365=742,42 15.07-21.07: 25422,88*9/100*6/365=37,61 21.04-21.07: 742,42+37,61=780,03 21.07-20.10: 26202,91*9/100*91/365=587,95Is interest on deposits taxable? What deposits are taxable?
I assume that there may be a question about taxes, why a corresponding calculator has not been made.
Let us turn to the law (Article 214.2 of the Tax Code of the Russian Federation): if at the time of conclusion or prolongation extension agreements up to 3 years, the interest on ruble deposits exceeds as of February 2014: 8.25% + 5% = 13.25% refinancing rate by 5 percentage points, That deposit rate minus 13.25% on interest income above this value A citizen of the Russian Federation needs to pay 35% tax. The bank must prepare the relevant documents.
In practice, no one sets a percentage higher than 13.25%:
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