Loan Calculator
Calculate your loan repayment details over time given your loan amount, term length, interest rate, and payment frequency. Key results include payment amount, total payments, and total interest paid.
Configuration
Key Results & Graph
Payment Amount
Monthly
$0.00Total Payments
0Total Paid
$0.00Total Interest
$0.00Amortization Table
| Payment # | Beginning Balance | Interest | Principal | Ending Balance |
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Calculator Overview
This loan calculator is a tool that helps you understand the total cost of borrowing money. It calculates your period payments and shows how much interest you will pay over the life of the loan.
Configuration
There are a few variables you can configure within this calculator:
- Loan Amount ($): The total amount of money you want to borrow.
- Loan Term: How long you have to pay the loan back expressed in years and months.
- Interest Rate
- Interest compounding basis: Compounded yearly (APY) or compounded Monthly (APR)
- Payment frequency: payment periods in monthly, fortnightly, weekly, or daily periods.
Key Results
The Calculator provides some key results such as
- Payment amount per period: The payment amount required per each period payment.
- Total number of payments: The amount of period payments required to pay off the loan.
- Total Paid: The total nominal amount paid over the life of the loan.
- Total interest: The total interest accumulated over the life of the loan.
Graph
The integrated interactive graph facilitates the visualization of your loan's cumulative cost and balance on an annual basis. This chart illustrates the total loan balance, accounting for the remaining loan balance, total principal paid, and accrued interest over the specified duration. By hovering over the data points, you can isolate the specific values for the remaining loan balance, total principal paid, and total interest paid for any given year.
Amortization Table
The dynamic amortization table generates a structured overview of each pay period within the life of the loan. This interface details the loan beginning balance, interest paid, balance paid, and ending balance for every pay period.
How can this calculator help you
Utilizing a loan calculator facilitates a comprehensive understanding of the total cost of borrowing. This calculator identifies all critical components of a structured loan, including the fixed periodic payment, the cumulative cost of the obligation, and the total interest accrued over the life of the loan.
The Math
The mathematical logic of a loan calculator is based on amortization, the systematic process of distributing a debt into a sequence of fixed periodic payments. To determine the precise monthly obligation, the software employs the Standard Loan Amortization Formula.
Monthly Payment Formula
The most common formula used to calculate a fixed monthly payment (M) is:
M = P * (r(1 + r)n) / ((1 + r)n − 1)
- P (Principal): The total amount you are borrowing.
- r (Monthly Interest Rate): The annual interest rate divided by 12 months (expressed as a decimal).
- n (Number of Payments): The total number of months over which you will repay the loan
Payment Amount
While your fixed periodic payment remains constant, the allocation between interest expense and principal reduction shifts with each billing cycle.
- Interest Portion: For any specific period, the interest obligation is determined by multiplying the remaining principal balance by the monthly interest rate (r).
- Principal Portion: The software deducts the calculated interest from the total periodic payment (M). The residual amount is applied directly to reduce the outstanding loan balance.
Calculating Total Interest
To find out the "true cost" of the loan, the calculator performs a simple secondary calculation:
Total Interest = (M × n) − P
This shows you the difference between the total amount paid over the life of the loan and the original amount borrowed.
Types of Loans
Fixed-interest loans have an interest rate that stays exactly the same for the entire life of the loan. This means your pay period principal and interest payment will never change, providing high predictability for your budget. Here are the most common types of fixed-interest loans with which you can use the loan calculator:
Fixed-Rate Mortgages
Fixed-Rate Mortgages represent the standard instrument for residential property acquisition. The interest rate established at inception is locked for the life of the loan, providing protection against rising market rates. These typically utilize 15-year or 30-year terms.
Auto Loans
Auto Loans are predominantly structured as fixed-rate obligations. Lenders determine the rate based on creditworthiness and vehicle age. Given the shorter durations, generally 3 to 7 years, a fixed rate provides a definitive schedule for debt retirement.
Personal Loans
Personal Loans are frequently offered as "unsecured" fixed-rate products. They are commonly utilized for debt consolidation or significant singular expenditures. Unlike revolving credit, these loans provide a fixed maturity date, with terms usually ranging from 2 to 7 years.
Student Loans
Student Loans issued by the federal government (including Direct Subsidized and Unsubsidized options) almost exclusively feature fixed rates. These rates are mandated by federal law based on the disbursement year and remain constant until the balance is resolved.
There are also Private Student Loans which can be fixed or variable rate loans.