Loan Calculator
💸 Loan Details
Understanding loans
What Is a Loan Calculator?
A loan can help you buy something today and pay for it over time, but the real cost of a loan is more than the amount you borrow. Interest rate, loan term, compounding frequency, and payment schedule all affect how much you pay every month and how much interest you pay in total.
A loan calculator is a financial tool that estimates the repayment cost of a loan. You enter the loan amount, interest rate, loan term, compounding frequency, and payment schedule. The calculator then estimates how much you may need to pay each month.
How to use
Key Inputs Explained
- Loan Amount
- The money you borrow from the lender. For example, if you borrow $100,000, that is your principal amount.
- Loan Term
- How long you take to repay the loan. A 10-year loan paid monthly has 120 payments. Longer terms mean smaller payments but more total interest.
- Interest Rate
- The cost of borrowing money, usually expressed as an annual percentage rate (APR).
- Compound Frequency
- How often interest is calculated. Usually matches the payment frequency, but can be daily, monthly, or annually.
- Pay Back Frequency
- How often you make payments. Most common is monthly, but can be weekly, bi-weekly, or annually.
The math
Loan Payment Formula
Most fixed-rate loans use this standard amortized monthly payment formula:
Loan payment formula
- PMT
- Monthly payment.
- P
- Loan amount (principal).
- r
- Monthly interest rate (APR / 12).
- n
- Total number of payments.
Example calculation
Example Calculation
Borrow $100,000 for 10 years at 6% APR, compounded monthly, paid monthly.
Amortization
What Is an Amortization Schedule?
An amortization schedule shows how each payment is divided between principal and interest. At the beginning of many loans, a larger part of the payment goes toward interest. Over time, as the balance decreases, more of each payment goes toward principal.
- Principal
- The portion of the payment that reduces the actual loan balance.
- Interest
- The cost paid to the lender for that specific period.
- Remaining Balance
- The loan amount still unpaid after the payment is applied.
Loan strategy
How to Lower Your Loan Cost
- 1
Borrow Less
A smaller loan amount means less principal to repay and usually less interest overall.
- 2
Choose a Shorter Term
Shorter terms increase your monthly payment but drastically reduce total interest.
- 3
Get a Lower Interest Rate
Compare multiple lenders and improve your credit score before applying.
- 4
Make Extra Payments
Paying extra toward the principal reduces the remaining balance faster.
Frequently Asked Questions
A loan calculator estimates your payment, total repayment, and total interest based on the loan amount, interest rate, term, and payment frequency.
Total interest is the extra amount you pay above the original loan amount over the life of the loan. It's the cost of borrowing.
A longer loan term can reduce the monthly payment, but it usually increases total interest. It may help monthly affordability, but it makes the loan more expensive overall.
Yes. Extra payments toward principal can reduce the remaining balance faster, which may reduce total interest and shorten the repayment period.
No. You can use this calculator for many fixed-payment loans, including personal loans, auto loans, student loans, business loans, and other installment loans.
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