Loan Calculator
Calculate monthly payments, total interest, and amortization schedule
Try These Demo Examples:
How Our Calculator Works
Primary Formula Used
Step-by-Step Calculation Process
- Convert Annual Rate to Monthly: r = Annual Rate ÷ 12 ÷ 100
- Calculate Number of Payments: n = Years × 12 (or use months directly)
- Apply the Formula: Calculate (1+r)^n first, then complete the formula
- Calculate Total Interest: (Monthly Payment × n) - Principal
- Generate Schedule: For each payment, calculate interest and principal portions
Example Calculation
Loan Amount: $200,000 | Interest Rate: 5% | Term: 30 years
Amortization Schedule Formula
For each payment period:
Understanding Loan Calculations: A Complete Guide
A loan calculator is an essential financial tool that helps you understand the true cost of borrowing money. Whether you're considering a mortgage, auto loan, personal loan, or business loan, understanding how loan calculations work can save you thousands of dollars and help you make informed financial decisions.
How Loan Calculations Work
Loan calculations are based on three primary factors: the principal amount (how much you borrow), the interest rate (the cost of borrowing), and the loan term (how long you have to repay). Our loan calculator uses the standard amortization formula to determine your monthly payment:
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n - 1]
Where P is the principal, r is the monthly interest rate, and n is the number of payments.
Types of Loans You Can Calculate
- Mortgage Loans: Calculate payments for home purchases, typically 15-30 year terms
- Auto Loans: Determine car payment amounts, usually 3-7 year terms
- Personal Loans: Calculate unsecured loan payments, typically 2-7 year terms
- Student Loans: Understand education loan repayment schedules
- Business Loans: Plan commercial financing payments
Understanding Amortization
Amortization is the process of paying off a loan through regular monthly payments. Each payment consists of two parts: principal (which reduces your loan balance) and interest (the cost of borrowing). Early in the loan term, most of your payment goes toward interest. As time progresses, more of your payment goes toward principal.
Factors That Affect Your Loan Payment
- Loan Amount: Higher loan amounts result in higher monthly payments
- Interest Rate: Even small rate differences can significantly impact total cost
- Loan Term: Longer terms mean lower monthly payments but more total interest
- Down Payment: Larger down payments reduce the loan amount needed
Tips for Getting Better Loan Terms
- Improve your credit score before applying
- Shop around with multiple lenders
- Consider making a larger down payment
- Choose the shortest term you can afford
- Consider paying extra toward principal
When to Use a Loan Calculator
Use our loan calculator when you're:
- Planning a major purchase like a home or car
- Comparing different loan offers
- Determining how much you can afford to borrow
- Evaluating the impact of different down payment amounts
- Considering refinancing an existing loan
- Planning your budget and cash flow
Benefits of Using Our Loan Calculator
Our free loan calculator provides instant, accurate calculations that help you:
- Make informed borrowing decisions
- Compare different loan scenarios
- Understand the total cost of borrowing
- Plan your monthly budget effectively
- See how extra payments can save money
Remember, while our calculator provides accurate estimates, actual loan terms may vary based on your creditworthiness, lender policies, and market conditions. Always consult with qualified financial professionals and compare offers from multiple lenders before making final decisions.