Loan Calculator
Calculate monthly payments, total interest, and amortization for any loan
The total amount you want to borrow
The yearly interest rate (APR)
Number of months to repay the loan
About This Calculator
A loan calculator is an indispensable financial tool that helps you understand the true cost of borrowing money. Whether you're considering a personal loan, auto loan, home improvement loan, or any other type of fixed-rate financing, this calculator shows you exactly what you'll pay each month and over the life of the loan.
Understanding your loan payments before you borrow is crucial for financial planning. Our free loan calculator instantly computes your monthly payment, total payment amount, and total interest cost. This information helps you make informed decisions about loan amounts, terms, and whether a particular loan fits your budget.
Key benefits of using our loan calculator: - See your exact monthly payment before applying - Compare different loan amounts and terms side-by-side - Understand how interest rates affect your total cost - Plan your budget around fixed monthly payments - Avoid taking on more debt than you can handle
This calculator uses the standard amortization formula used by banks and lenders, so the results closely match what you'll see in actual loan offers.
How to Use This Calculator
- 1Enter the total loan amount you want to borrow
- 2Input the annual interest rate (APR) offered by the lender
- 3Select or enter the loan term in months (e.g., 60 months for a 5-year loan)
- 4View your monthly payment and total costs instantly
- 5Try different combinations to find the best loan structure for your budget
When to Use This Calculator
- Shopping for a personal loan and comparing offers
- Determining how much car you can afford
- Planning for a major purchase with financing
- Refinancing existing debt at a lower rate
- Creating a debt payoff plan
- Understanding the impact of different loan terms
The Formula
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1]This formula calculates the fixed monthly payment needed to fully repay a loan with compound interest over a set number of periods.
Variables:
- M = Monthly Payment — Fixed payment each month
- P = Principal — Original loan amount
- r = Monthly Rate — Annual rate / 12
- n = Number of Payments — Loan term in months
Example Calculations
Auto Loan Example
A $25,000 car loan at 6.5% APR for 5 years costs $489.15/month with $4,349 total interest.
Personal Loan Example
A $10,000 personal loan at 10% APR for 3 years costs $322.67/month with $1,616 total interest.
Home Improvement Loan
A $50,000 home improvement loan at 8% APR for 10 years costs $606.64/month with $22,797 total interest.
Frequently Asked Questions
The monthly payment is calculated using the standard amortization formula: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1], where P is the principal, r is the monthly interest rate (annual rate / 12), and n is the number of payments. This formula ensures equal monthly payments that fully pay off the loan.
The interest rate is the cost of borrowing the principal amount. APR (Annual Percentage Rate) includes the interest rate plus other fees and costs, giving you a more complete picture of the loan's total cost. For this calculator, use the APR for the most accurate results.
A shorter term means higher monthly payments but less total interest paid. A longer term has lower monthly payments but costs more in total interest. Choose based on your monthly budget and how much you want to minimize total interest.
Financial experts generally recommend keeping total debt payments (including mortgage) under 36% of your gross income. For a single loan, aim for payments that leave comfortable room in your budget for savings and unexpected expenses.
Most loans allow early payoff, but some have prepayment penalties. Check your loan terms. Paying extra toward principal can significantly reduce total interest and shorten your loan term.
Loan interest compounds over time. In the early months, a larger portion of your payment goes to interest. As you pay down the principal, more of each payment goes toward the balance. This is why the total interest can be substantial, especially for longer terms.
This calculator works for fixed-rate loans with regular monthly payments, including personal loans, auto loans, and fixed-rate mortgages. It may not be accurate for variable-rate loans, interest-only loans, or loans with balloon payments.
💡 Pro Tips
- •A shorter loan term means higher monthly payments but less total interest
- •Even a small difference in interest rate can save thousands over the loan life
- •Make sure you can comfortably afford the monthly payment with room to spare
- •Consider making extra payments to pay off the loan faster and save on interest
- •Compare the total cost (principal + interest) when evaluating loan options
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