Loan Calculator
Calculate monthly loan payments and see how extra payments can save you money and reduce your loan term with a detailed amortization schedule.
Amortization Schedule
| Month | Payment | Principal | Interest | Balance |
|---|
How to Use the Loan Calculator
Calculate your monthly loan payment and total interest cost for any loan. Add extra monthly payments to see how much interest you can save and how quickly you can pay off your loan.
- Enter your loan amount (principal borrowed)
- Enter the interest rate (annual percentage rate)
- Select your loan term (repayment period)
- Optionally add an extra monthly payment to see the impact
- View your monthly payment, total interest, and complete amortization schedule
- Compare scenarios with and without extra payments to optimize your payoff strategy
Loan Payment Formula
Monthly Payment Calculation:
M = P × [r(1 + r)^n] / [(1 + r)^n - 1]
Where:
- M = Monthly payment
- P = Principal loan amount
- r = Monthly interest rate (annual rate / 12 / 100)
- n = Total number of monthly payments
Total Interest Paid:
Total Interest = (M × n) - P
For example, a $25,000 loan at 7.5% APR for 5 years results in a monthly payment of $502.40. Over 60 months, you'll pay $30,144 total ($5,144 in interest). Adding just $100/month in extra payments saves $1,123 in interest and pays off the loan 11 months early.
Common Loan Payment Examples
- $10,000 at 5% for 3 years: $299.71/month ($789.56 total interest)
- $20,000 at 8% for 5 years: $405.53/month ($4,331.80 total interest)
- $15,000 at 6% for 4 years: $352.28/month ($1,909.44 total interest)
- $30,000 at 9% for 6 years: $510.90/month ($6,784.80 total interest)
- Extra payments: $25,000 at 7.5% for 5 years with $100 extra = $602.40/month, saves $1,123 interest
Understanding Loan Payments
A loan payment consists of principal (the amount borrowed) and interest (the cost of borrowing). Early in the loan, most of your payment goes toward interest. As you pay down the principal balance, more of each payment goes toward principal. This is called amortization.
The Annual Percentage Rate (APR) represents the true cost of borrowing including interest and fees. A higher APR means higher monthly payments and more total interest paid. Even small differences in APR can significantly impact your costs. For example, on a $20,000 5-year loan, the difference between 7% and 8% APR is $4.47/month but $268 total.
Extra payments directly reduce your principal balance, which decreases the interest charged on future payments. This creates a compound effect that can save thousands in interest and shave months or years off your loan. The earlier you make extra payments, the greater the impact. Even small extra payments add up significantly over time.
Different loan types have different characteristics. Personal loans typically have fixed rates and terms of 1-7 years. Auto loans usually span 3-6 years. Student loans may have terms of 10-30 years. Shorter terms mean higher monthly payments but less total interest. Longer terms offer lower payments but higher total cost.
Loan Best Practices
Before You Borrow
- Check your credit score -- A score above 720 qualifies you for the best rates. Even a 50-point improvement can save thousands over the loan term.
- Shop multiple lenders -- Compare at least 3-5 lenders. Credit unions often offer lower rates than banks. Online lenders may have lower overhead and competitive rates.
- Understand total cost -- Focus on the total amount paid (principal + interest), not just the monthly payment. A lower payment with a longer term often costs more overall.
- Read the fine print -- Check for prepayment penalties, variable rate clauses, and origination fees before signing.
While Repaying
- Set up autopay -- Many lenders offer a 0.25% rate discount for autopay, and you'll never miss a payment.
- Make biweekly payments -- Paying half your monthly amount every two weeks results in one extra full payment per year, accelerating payoff.
- Apply windfalls to principal -- Tax refunds, bonuses, and unexpected income can significantly reduce your loan balance when applied as extra payments.
- Consider refinancing -- If rates drop 1% or more below your current rate, refinancing can save substantial money. Factor in closing costs to determine if it's worthwhile.
Loan Type Comparison
| Loan Type | Typical Rate | Typical Term | Secured? | Best For |
|---|---|---|---|---|
| Personal Loan | 6% - 36% | 1 - 7 years | No | Debt consolidation, major purchases |
| Auto Loan | 4% - 12% | 3 - 7 years | Yes (vehicle) | New or used vehicle purchase |
| Student Loan (Federal) | 5% - 8% | 10 - 25 years | No | Education expenses |
| Home Equity Loan | 7% - 12% | 5 - 30 years | Yes (home) | Home improvements, large expenses |
| Credit Card | 16% - 28% | Revolving | No | Short-term, paid in full monthly |
Tip: Always pay off high-interest debt (credit cards) before making extra payments on low-interest loans. The interest rate difference makes this the most financially efficient strategy.