If you’re planning to have a pool built in your backyard or if you want to have your pool remodeled just in time for pool season, taking up a pool loan might be a good idea. A pool loan can help you finance your next pool project and not focus on how much each new feature would cost. But how do you exactly compute your monthly pool loan payment? Don’t be concerned, as we are here to help you find the easiest way to calculate the monthly costs when you sign up for a pool loan.
Where to Start?
First, you’d want to know where you can get a pool loan. There are a lot of places where you can get a loan for your pool and knowing the best option can help make a better decision. Here are the common places where you can get a pool loan.
- Credit unions
- Swimming pool contractors
Yes, you’ve read that right. You can get pool loans from swimming pool companies that offer in-house pool financing services. They basically partner with banks and other financial institutions to fund their customers’ swimming pool projects. On the other hand, you can typically apply for a personal loan from banks and credit unions. Make sure to talk to any of their reps and discuss your loan in detail. You might want to ask for it in writing so you can refer to what they’re offering before you make it a done deal.
If you want to make sure that you’re getting the right computation, follow these three easy tips on how you can compute your projected monthly payments when taking up a pool loan.
1. Go over the details.
Remember when you’ve asked the representative you’ve talked to for the purpose of going over the details with you, and to have the details they’ve discussed put in writing? Now’s the time to go over them yourself.
Before you start crunching the numbers, check whether you’re getting an interest-only loan or an amortized loan. Typically, an interest-only loan would have you pay only the interest for the first few years. That means there’s no principal amount included in the equation, at least for the first few years you and the representative you talked to agreed upon. On the other hand, amortized loans include both the interest and the principal loan over the course of the payment term. The latter is more common than the former.
There are pros and cons to both interest-only and amortized loans. Because you’ll pay only the interest when you take up an interest-only loan, the monthly payment terms will often be small and easy to work with – at least for a certain amount of time. However, you’ll have to pay off the full amount either as a lump sum or a higher payment term that usually includes the principal cost. With amortized loans, the amount you’ll have to pay for will be fixed throughout the entirety of the payment term.
2. Know your loan’s payment formula.
Pool loans are calculated the way any other loans are calculated. When you have an interest-only pool loan, the formula is typically the loan balance multiplied by the interest rate divided in twelve months.
Let’s say your borrowed amount is $100,000 with a 5% interest rate. The calculation will be $100.000 x 0.05 = $5,000 annually. This will be divided by 12 which gives you the amount of $416.67 a month.
If you have an amortized loan, the formula to calculate your loan will be different, and a little more involved. Here’s why. First, you take the total borrowed amount and find the discount factors. Your discount factors will be the periodic interest rate, which you get by computing the annual rate divided by the number of payment periods, as well as the number of periodic payments, which you get by computing the payments per year multiplied by the number of years. Here’s a quick example.
Say you have a pool loan of $10,000 with a 3% interest rate payable for 7 years. Your total borrowed amount will be $10,000, divided by your discount factors, 75.68. Then your monthly payment will be at $132.13.
Knowing these payment formulas will also help you know what kind of pool loan to take as you’d get to know the details of the actual loan. In case calculating your monthly pool financing costs made you break a sweat, this next tip will surely help out.
3. Use an online pool financing calculator.
For most banks, financial institutions, and even pool contractors that offer in-house pool financing, you’ll find a helpful tool conveniently placed at their websites. Called an online pool financing calculator, these pages are designed and engineered with the right values used by these institutions to easily calculate your monthly loan costs.
Some pages will require you to enter the necessary values manually while others will automatically calculate the values and you’d only have to put in the loaned or borrowed amount on the fields indicated. It’s a simple, straightforward, and convenient way of computing your pool financing monthly payment whether you’ve already taken up a pool loan or if you’re just planning to get one. Nevertheless, companies that put up these online tools are keen on helping out their customers so you can rest assured that they can help you finance your swimming pool.
As we’ve briefly covered above, you can find these pages on banks, financial institutions, and even on swimming pool companies. In fact, you can visit Valley Pool Plaster’s website so you can see just how easy it is to use an online pool financing calculator. And while you’re at it, check out what solutions they offer that might just help you remodel and even maintain your swimming pool. Valley Pool Plaster is one of the best in the business not only because they offer reliable and dependable in-house pool financing services but because of the quality of the service they provide for customers who sign up for their pool remodeling services.
Get the best tips on how you can calculate your pool financing monthly payment using these three easy tips. Visit Valley Pool Plaster to find out what professional quality swimming pool service is and to see just how easy it is to use their pool financing calculator.