How To Simulate A Loan?

If you need a consumer credit to realize a project that is important to you, start by doing a credit simulation, even before choosing a bank or a lending institution. We explain why and how to use an online credit simulator.

Why do a credit simulation?

When considering taking out a consumer loan to finance a project such as buying a car, for example, you need to be well aware that this loan will need to be repaid.

It is therefore more prudent to know what you are committing to and to have an idea of the interest rate and the amount of future monthly payments to be paid. Making a credit simulation is an essential step to know and anticipate these different parameters.

Thanks to online calculation tools, such as FLOA Bank's credit calculator for example, it is now very easy to figure out the main characteristics of a consumer credit, starting with the monthly payment amount and the repayment period.

How to make a credit simulation?

A credit simulation is a calculation you can perform online free of charge and without obligation.

Simply indicate the amount you wish to borrow as well as the desired repayment period to obtain a first estimate :
- the amount of the monthly payment to be reimbursed
- the monthly cost of the optional insurance
- the interest rate of the loan
- the APR (i.e. the annual percentage rate of charge which allows you to estimate the total cost of the loan).

To note: using an online credit simulator, you will realize that the longer the repayment period and the lower the monthly payment to be repaid but the higher the APR.

This type of tool allows you to clearly visualize that the overall cost of credit increases with the repayment period, in return for a lower monthly payment.

Doing a simulation therefore allows you to choose a 12-month, 18-month or 24-month consumer credit with full knowledge of the facts.

What are the pitfalls to avoid?

The results given by online consumer credit simulators are generally reliable. These online tools give you accurate figures in just a few clicks and allow you to access the corresponding credit offers.

To avoid unpleasant surprises when you do an online credit simulation, you should simply check the following:
- does the credit offer include insurance costs?
- is the APR (the 'all-inclusive' interest rate) clearly indicated to allow comparison between several offers?
- is the total amount due explicitly stated in euros?

With the total amount due, you can easily calculate the total cost of your loan. All you have to do is subtract total amount due - amount borrowed.

To note: when taking out a consumer loan, it is not mandatory to take out borrower's insurance. However, this type of insurance can be useful if you are exposed to the risk of death, disability or illness during the repayment period of your credit.

A loan commits you and must be repaid. Check your ability to repay before committing yourself.