Loan Payment Calculator
Estimate your monthly payments, interest costs, and total loan amount
The total amount you want to borrow
The yearly interest rate
Duration to repay the loan
Loan Breakdown
Loan Amount: $0 | Interest Rate: 0% | Term: 0 years
Understanding Your Loan Details
Interest Rate Explained
The interest rate is the cost of borrowing money, expressed as a percentage of the loan amount. This calculator uses a fixed interest rate for the entire loan term.
Factors affecting your interest rate:
- Credit score and history
- Loan amount and term
- Current market conditions
- Type of loan (secured vs unsecured)
Amortization Process
Amortization is the process of paying off a loan through regular payments over time. Each payment covers both interest and principal:
- Early payments consist mostly of interest
- Later payments consist mostly of principal
- Your balance decreases slowly at first, then faster
This calculator uses the standard amortization formula to determine your monthly payment.
Reducing Interest Costs
Strategies to minimize interest payments:
- Make extra payments toward principal
- Choose a shorter loan term
- Refinance at a lower interest rate
- Make bi-weekly payments instead of monthly
Even small extra payments can significantly reduce total interest paid over the life of the loan.
Important Considerations
This calculator provides estimates only. Actual loan terms may include:
- Origination fees and closing costs
- Prepayment penalties
- Insurance requirements
- Variable interest rates
Always consult with a financial advisor and carefully review your loan agreement before committing to any loan.
How to Use This Loan Calculator
This calculator helps you understand the true cost of borrowing money by showing your monthly payments, total interest charges, and the overall amount you'll repay. It's designed to be accurate and easy to use for various loan types including personal loans, auto loans, and mortgages.
Step-by-Step Guide:
- Enter the Loan Amount - The total amount you plan to borrow. This is the principal amount before any interest or fees.
- Input the Annual Interest Rate - The percentage rate your lender charges yearly. This should be the fixed rate for the entire loan term.
- Specify the Loan Term - How many years you'll take to repay. Shorter terms mean higher payments but less total interest.
- Click "Calculate Loan Payments" - Get instant results showing:
- Your estimated monthly payment
- The total interest you'll pay
- The full repayment amount (principal + interest)
- Percentage of total cost that is interest
Tip: Try different loan terms to see how paying faster (shorter term) reduces total interest! For example, reducing a 5-year loan to 4 years can save you thousands in interest payments.
Frequently Asked Questions
Does this include loan fees or insurance?
This calculator shows principal and interest only. For complete costs, add estimated fees to your loan amount. Most loans include origination fees (typically 1-6% of loan amount) and may require insurance, which would increase your total costs.
How does loan term affect payments?
Shorter terms mean higher monthly payments but less total interest. Longer terms lower monthly payments but increase total interest paid. For example, a $25,000 loan at 6.5% would have:
- 3-year term: $766/month payment, $2,576 total interest
- 5-year term: $489/month payment, $4,355 total interest
- 7-year term: $370/month payment, $6,080 total interest
What's the difference between fixed and variable rates?
Fixed rates remain constant throughout the loan term, providing predictable payments. Variable rates may change periodically based on market conditions, which can make your payments unpredictable. This calculator assumes a fixed rate. For variable rate loans, your actual payments may differ.
Can I calculate extra payments?
This shows standard payments. To see how extra payments affect your loan, use an amortization calculator with prepayment options. Making even small additional payments can significantly reduce your total interest cost. For example, adding $50/month to a $25,000 loan at 6.5% for 5 years would save $872 in interest and pay off the loan 10 months early.
Why does my actual payment differ from this estimate?
Lenders may include fees, insurance, or use different calculation methods. Actual loan terms may also include:
- Compound interest calculations
- Different payment frequencies (bi-weekly vs monthly)
- Grace periods or payment holidays
- Balloon payments
Always check with your lender for exact payment amounts and review all loan documents carefully.
