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Loan Calculator

Calculate monthly loan payments, total interest, and amortization schedule for any loan.

Last Updated: February 2025
Standard Financial Formula
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📖 Want to understand how this works?Read our full guide →

Loan Calculator

What is Loan Calculator?

A loan calculator computes monthly payments, total interest, and payoff schedules for personal loans, auto loans, student loans, and other installment debt. Based on loan amount, annual interest rate (APR), and term length, it calculates how much you'll pay monthly, total interest over the loan life, and provides an amortization schedule showing how each payment splits between principal and interest. Essential for comparing loan offers, understanding true borrowing costs, planning debt payoff strategies, and making informed borrowing decisions before signing loan agreements.

Key Benefits & Use Cases

Avoid expensive loans by comparing offers from multiple lenders and seeing total interest costs, not just monthly payments. Understand how loan term affects total costs—shorter terms mean higher monthly payments but dramatically lower total interest. Calculate the impact of extra payments toward principal to pay off loans faster and save thousands in interest. See exactly how much of each payment goes to interest versus reducing your balance, helping you understand why loans take so long to pay off initially. Credit counselors, loan officers, and financially savvy borrowers use this to make smart borrowing decisions.

How to Use This Calculator

Enter your loan amount (how much you want to borrow), annual interest rate (APR) from your lender, and loan term in years (3, 5, 7 years for personal/auto loans; 10-30 years for home loans). Results show monthly payment amount, total interest paid over the loan life, total amount repaid, and a detailed amortization schedule. Compare different scenarios by adjusting term length—see how a 5-year vs 7-year loan affects monthly payment and total interest. Use the extra payment calculator to see how paying $50-100 extra monthly can save thousands and shorten your loan by years.

How to Use This Calculator

Start by entering your desired loan amount - the total sum you need to borrow. Input the annual interest rate (APR) provided by your lender; compare rates from multiple lenders as even 0.5% differences significantly impact total costs. Select your loan term in years; shorter terms mean higher monthly payments but dramatically less total interest. Common terms are 3-7 years for personal/auto loans and 15-30 years for mortgages. Click calculate to see your fixed monthly payment, total interest over the loan life, and total amount repaid. The amortization schedule reveals how each payment splits between principal and interest - early payments are mostly interest, while later payments are mostly principal. Use the extra payment calculator to see how additional principal payments shorten your loan and save interest.

How It's Calculated

Loan payments are calculated using the standard amortization formula, which creates equal payments over the loan term while accounting for compound interest on the remaining balance.

PMT = P × [r(1+r)^n] / [(1+r)^n - 1]

Where:

  • PMT= Monthly payment amount
  • P= Principal (loan amount)
  • r= Monthly interest rate (APR ÷ 12)
  • n= Total number of payments

Worked Example

Scenario: Maria needs a $25,000 auto loan to purchase a car. She's comparing a 5-year loan at 7% APR versus a 4-year loan at 6.5% APR.

Given Values:

Loan Amount
$25,000
Option 1
5 years at 7% APR
Option 2
4 years at 6.5% APR

Calculation:

5-year loan: r = 7%/12 = 0.583%, n = 60 months
PMT = $25,000 × [0.00583(1.00583)^60] / [(1.00583)^60-1]
PMT = $495.03/month | Total paid = $29,702 | Interest = $4,702
4-year loan: r = 6.5%/12 = 0.542%, n = 48 months
PMT = $592.09/month | Total paid = $28,420 | Interest = $3,420

Result: The 5-year loan has lower monthly payments ($495 vs $592) but costs $1,282 more in interest ($4,702 vs $3,420). Maria saves $1,282 by choosing the 4-year loan if she can afford the extra $97/month. If she pays an extra $100/month on the 5-year loan, she'll pay it off in 43 months and save $1,050 in interest.

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Frequently Asked Questions

Common questions about loan calculator

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