Loan Calculator
Calculate monthly payments, total interest, and total repayment for any loan.
How Loan Calculations Work
Loans are repaid through amortization — a series of equal payments that cover both principal and interest. In the early stages of a loan, most of each payment goes toward interest. As the loan matures, more goes toward principal. This is why making extra payments early in a loan term can save significant amounts of interest. When comparing loans, always look at the APR (Annual Percentage Rate), which includes fees and gives a true cost of borrowing.
Frequently Asked Questions
How is monthly payment calculated?
Monthly payment = P × [r(1+r)^n] / [(1+r)^n - 1], where P is principal, r is monthly rate, and n is total payments.
What is amortization?
Amortization is the process of paying off a loan through regular payments. Early payments are mostly interest; later payments are mostly principal.
Should I choose a shorter or longer loan term?
Shorter terms mean higher monthly payments but less total interest. Longer terms have lower payments but cost more overall.