Bank Loan Calculator Singapore (2020)

Successful businesses do TWO things very well:

First, they leverage on other people’s money to make more money!

Second, they know exactly how much debt to take on.

And you’re probably wondering:

“How do they know exactly how much to borrow from the banks?”

Well, its simple…

…they know how to use a bank loan calculator.

So, What is Bank Loan Calculator?

The bank loan calculator Singapore is used to calculate the cost of taking up a loan.

Specifically, it is used to find out how much your loan installments will be.

More than all that, our bank loan calculator will help you to make a better decision on how much debt you should take on, by showing you how much your monthly installments will be.

There are many different kinds of bank loan calculators, depending on the type of loan you are taking. Different loans may be calculated in different ways.

Here is a list of the various loan calculator types:

  • Simple Term Loan Calculator
  • Housing Loan Calculator
  • Compound Interest Calculator
  • Car Loan Calculator

For example, a traditional business term loan will usually be based on a flat interest rate, where installment sums are uniform throughout the tenure of the loan.

A housing loan is usually amortized, where most of the monthly payment goes toward interest early in the loan. With each subsequent payment, a greater percentage of the payment goes toward the loan’s principal.

At some point in time, most businesses will need to get access to additional capital. It could be for many different reasons. The funds could be for daily business operations, business expansions, buying equipment, or simply to improve cash flow.

In most cases, unsecured business term loans are usually the preferred type of funding.

Be it a short-term loan from a crowdfunding platform, or a long-term small bank loan like the SME Working Capital Loan and the SME Micro Loan, a business bank loan would probably be your best financing option.

How much is the interest rate of your term loan?

What is the monthly installment amount?

Use our bank loan calculator to get those numbers in a matter of seconds!

How To Use the Bank Loan Calculator Singapore?

“How much will my monthly repayments be?” The one most common question that almost every single borrower will ask. Look no further! Get those digits right here in a matter of seconds.

No matter the quantum or tenure of your new loan, our business loan calculator will tell you how much your monthly repayments are in just a matter of seconds. 

To get a good idea of how much you will be paying back monthly, simply key in the loan amount, term in years, and the proposed interest rate from the bank. 

In the following paragraphs, we will also be touching on how to understand the results.

Under ‘Monthly Instalment’, the figure that you see will be the monthly repayment amount that you will have to service on a monthly basis until the debt is cleared. 

Therefore, be sure to do some calculations and make sure that the monthly payments are sustainable before committing to a loan.

Moving on, you will also see ‘Total Interest Charged’, which is a figure that is dependent on the loan amount and total tenure offered. 

The total amount of interest can vary depending on both your interest rate and loan term. 

However, not to worry, this segment will share a little bit on how to save on interest rates.

In some cases, carrying out an early redemption or refinancing of a loan will help to lessen the total amount of interest paid.

When a refinancing occurs, it is the simple process of a loan being transferred over to another bank, where you will most likely be offered lower interest rates.

What is Effective Interest Rate (EIR)?

Also known as the Reducing Balance interest rate, the effective interest rate, or EIR, reflects the true cost of a business loan.

To be precise, the EIR reflects the actual cost of the business loan at the end of its tenure, and is usually amortized on a reducing balance basis.

The reducing balance method of amortizing loan payments has it that interest rates are reduced as the balance of the loan amount gets smaller with each payment. 

Essentially, it follows an inverted pyramid structure – where a larger portion of interest is.

What is Compound Interest Calculator?

Compounding interest is the concept of accumulating interest on top of the principal, where each interest earned is added to the principal.

This causes the principal balance to grow at an increasing rate. Compounding interest is good when used on your savings or an investment, but not when you are the debtor.

Compounding rate frequency is typically based on a yearly timeline. It is mainly utilized only when a client delays or defaults on payments. 

To calculate interest rates, you can use the compound interest calculator.

Compound Interest Calculator

Compound Interest Calculator

How Do I Calculate Compound Interest?

Here is the formula for compound interest.

By using the compound interest formula:

A = P(1 + r/n)nt

Formulas where n = 1 (compounded once per period or unit t)

  • Calculate Accrued Amount (Principal + Interest)
    • A = P(1 + r)t
  • Calculate Principal Amount, solve for P
    • P = A / (1 + r)t
  • Calculate rate of interest in decimal, solve for r
    • r = (A/P)1/t – 1
  • Calculate rate of interest in percent
    • R = r * 100
  • Calculate time, solve for t
    • t = t = ln(A/P) / ln(1 + r) = [ ln(A) – ln(P) ] / ln(1 + r)

How Do You Calculate Monthly Payments On A Loan?

Before you start calculating your loan payments, you need to know the type of loan that you are using. Different types of loans will require different loan calculators.

For traditional bank term loans, you will use the standard loan calculator that utilizes the following method:

  1. Multiply the principal loan amount by the annual interest rate.
  2. Divide the result from (1) by the number of payments per year.

Being that most loans are amortized these days, here is the formula for calculating amortized loan repayments:

Loan Payment = Amount / Discount Factor (P = A/D)

You need the following values:

  • Number of Periodic Payments (n) = Payments per year times number of years
  • Periodic Interest Rate (i) = Annual rate divided by number of payment periods
  • Discount Factor (D) = {[(1 + i) ^n] – 1} / [i(1 + i)^n]

General FAQ

How does amortization work?

Amortization is a commonly used method of scheduling loan repayments. It is done by spreading out the loan repayments evenly over a period of time.

With amortization, your monthly installment amount is uniform, but the amount that you are paying for interest and principal will be different.

A larger ratio of your monthly loan installment will be allocated to paying off interest at the start, and will decrease progressively over time until the portion allocated to paying for the principal becomes bigger.