Here's how to calculate loan interest without collateral!
How long is the process of applying for loans without collateral?Is There A Survey That Needs To Be Done For Applicants For Loans Without Collateral?
The survey is only conducted for credit applicants who have a place of business (self-employed or professional) only. For employees, the bank will not conduct surveys.
What is Debt Ratio?
Debt Ratio is a comparison between income or salary per month with ongoing credit installments. It is highly recommended that you maintain a ratio of total debt and installments per month so that it does not exceed 40% of your monthly income. This is because if the ratio is more inclined to debt, then you can be sure you will be overwhelmed to make ends meet. Conversely, if the more debt ratio is smaller, the more funds will be used for saving. The bank also uses this ratio to measure the financial capacity of prospective borrowers. Usually they will set the ratio of not more than 30% to anticipate the risk of bad credit.
How to Calculate Debt Ratio?
The way to calculate the debt ratio is by knowing the total dependents (debt), then dividing it by the total assets you have. The following is an example of the calculation.
Example:
Income: IDR 10,000,000 / month
Credit card installments: IDR 1,000,000 / month
Car loan installments: IDR 1,000,000 / month
Home loan installments: IDR 1,000,000 / month
Debt Ratio: Total debt: Income
= IDR 3,000,000: IDR 10,000,000
= 30%
How to Calculate Installments for loans without collateral?
To make it easier to find out how to calculate the installment of loans without collateral, let's look at the following example:
Doni received loans without collateral amounting to Rp.24,000,000 with an interest charged at 12% annually. Doni chose to pay it off within 24 months.
Installments per Month:
(Principal loan: Tenor)
= IDR 24,000,000: 24 months <br> = 1,000,000 / month
Loan Interest per Month:
(Loan principal x interest: 12 months)
= IDR 24,000,000 x 12%: 12 months
= IDR 240,000
Fixed Installments per Month:
(Principal installment + loan interest)
= IDR 1,000,000 + IDR 240,000 br> = IDR 1,240,000
In conclusion, when Doni gets loans without collateral of IDR 24 million with a loan term of 24 months and an interest of 12%, then Doni will have an installment expense of IDR 1,240,000 each month.
What is the Payment Method for loans without collateral?
The bank has provided convenience by offering various methods for making loan payments without collateral. Some of these methods include transferring services between banks via ATMs, making deposits directly to bank tellers, via mobile and internet banking, or by registering auto-debit from debtor accounts. In addition, some banks also offer options regarding the payment of the bill amount. The first option is to pay a fixed amount along with flat interest. Then the second option is to pay the amount according to the debtor's ability, even though there are several terms and conditions that must be met for this option.
What is a Fixed Rate?
In loans without collateral, the fixed rate is the determination of the interest rate which is a fixed amount for a certain period of time. For example, there are banks that offer a fixed rate of 7.5% for two years. This means, debtors for unsecured loans can enjoy 7.5% interest for two years.
What is a Floating Rate?
This is the determination of the interest rate on unsecured loans which refers to market interest. Thus, here the interest rate on loans without collateral that a debtor gets can fluctuate. If the market is in good condition, which can be seen from the Bank Indonesia interest rate, the interest charged to debtors for unsecured loans is low. Can be below 10%. Meanwhile, if market conditions are gloomy like now, the interest rate could rise to more than 15%. Banks often combine a fixed rate with a floating rate in their promotional programs. Each bank has different terms of review or review of KTA interest. There are those who do a review every 3 months or 6 months but rarely yearly.
How is the Interest Calculated in Submitting loans without collateral?
In general, there are 3 (three) types of calculation of interest for loan products, including for unsecured loan products, which are as follows:
Flat Interest Rate:
The flat interest rate is the easiest interest calculation. Each month the installments are the same, the interest is the same, the principal installments are the same. Usually this interest calculation is used on loans without collateral (Unsecured Loans). In flat or fixed interest loans, the credit limit and the amount of interest will be calculated proportionally according to the credit period. The interest rate will remain the same every month, because interest is calculated as the percentage of interest times the principal amount of the original loan. So the amount of principal + interest payments each month will be the same.
Effective Interest Rate:
In loans with effective interest or sometimes called a sliding rate, the interest calculation is done at the end of each installment period. Credit interest is calculated from the ending balance of each month. Interest is calculated based on the principal amount that has not been paid. So the interest per month will vary based on the principal amount still owed. The interest value paid by the debtor every month will decrease. Because the interest paid is decreasing, the installments per month will decrease from time to time. The second month's installment is smaller than the first month's installment, and so on.
Annuity Interest Rate:
Annuity interest credit is a modification of the effective interest credit calculation. This modification is made to make it easier for customers to pay per month, because the monthly installments are the same. In an interest rate loan with an annuity, the monthly installments are fixed. However, the composition of the interest and principal installments will change each period. The interest value per month will decrease, the principal installments per month will increase. So the monthly installments are fixed, only the composition of the principal and interest is different.
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