Loan Calculator
Calculate monthly payments, total interest, and payoff schedule for any loan. Compare different terms to find the best option.
Loan Payment Formulas
Monthly Payment
Total Interest
Total Payment
Common Terms
Understanding Loan Payments
Whether you're borrowing for a car, home improvement, debt consolidation, or any other purpose, understanding your loan payments is crucial for financial planning. Our loan calculator helps you see exactly what you'll pay each month and over the life of the loan.
By adjusting the loan amount, interest rate, and term, you can find the right balance between affordable monthly payments and minimizing total interest paid.
Monthly Payment
See exactly what you'll pay each month.
Total Interest
Understand the true cost of borrowing.
Compare Terms
See how different loan lengths affect costs.
Payoff Timeline
Know exactly when you'll be debt-free.
How Loan Payments Work
Each loan payment consists of two parts: principal and interest. Early in the loan, most of your payment goes toward interest. As time passes, more goes toward principal.
Principal
The portion of your payment that reduces your loan balance. Starts small and grows over time.
Interest
The cost of borrowing, calculated on your remaining balance. Starts large and decreases over time.
Amortization
The process of spreading payments over time so each payment is the same amount.
Extra Payments
Paying extra toward principal reduces total interest and shortens your loan term.
Loan Term Comparison
Choosing the right loan term involves balancing monthly affordability with total interest cost.
| Term | Monthly Payment | Total Interest | Best For |
|---|---|---|---|
| 12 months | Highest | Lowest | Small loans, quick payoff |
| 24 months | High | Low | Balance of speed and cost |
| 36 months | Moderate | Moderate | Common for auto loans |
| 60 months | Lower | Higher | Larger purchases |
| 84 months | Lowest | Highest | Maximum affordability |
Tips for Getting the Best Loan
A little preparation can save you thousands of dollars over the life of your loan.
Check Your Credit Score
Your credit score is the biggest factor in your interest rate. A score above 750 gets the best rates. Check your score before applying and dispute any errors.
Shop Around
Get quotes from at least 3-5 lenders including banks, credit unions, and online lenders. Rate differences of 0.5% to 2% are common and cost thousands over the loan term.
Compare APR, Not Just Rate
APR includes fees and gives a truer cost comparison. A lower rate with high fees may cost more than a slightly higher rate with no fees.
Consider the Total Cost
A lower monthly payment with a longer term often means paying much more in total interest. Calculate both before deciding.
Avoid Prepayment Penalties
Some loans charge fees for paying off early. Make sure you can pay extra or refinance without penalties if your financial situation improves.
Right-Size Your Loan
Only borrow what you need. It's tempting to take a larger loan for 'just in case,' but you'll pay interest on every dollar borrowed.
The Power of Extra Payments
Making extra payments toward your principal is one of the most effective ways to save money on your loan.
$50 Extra Monthly
On a $20,000 loan at 7% for 5 years, adding $50/month saves $400 in interest and pays off the loan 6 months early.
$100 Extra Monthly
Same loan with $100 extra monthly saves $750 in interest and pays off nearly a year early.
One Extra Payment Yearly
Making one extra payment per year (or biweekly payments) significantly reduces interest and shortens the loan term.
Lump Sum Payments
Apply tax refunds, bonuses, or windfalls to principal. Early in the loan, this has the biggest impact on total interest.
Frequently Asked Questions
What's the difference between APR and interest rate?
The interest rate is the base cost of borrowing money. APR (Annual Percentage Rate) includes the interest rate plus any fees, giving you the true cost of the loan. When comparing loans, use APR for an apples-to-apples comparison.
Should I choose a shorter or longer loan term?
It depends on your priorities. A shorter term means higher monthly payments but less total interest. A longer term means lower monthly payments but more interest over time. Choose based on what fits your budget while minimizing unnecessary interest.
Can I pay off my loan early?
Most loans allow early payoff, but check for prepayment penalties first. Federal law prohibits prepayment penalties on mortgages for most borrowers, but personal and auto loans may have them. Read your loan agreement carefully.
How does my credit score affect my loan?
Your credit score significantly impacts your interest rate. Excellent credit (750+) gets rates 2-5% lower than poor credit (below 650). On a $25,000 loan over 5 years, this difference can mean $3,000+ in savings.
What's the best way to pay off a loan faster?
The most effective methods are: 1) Make biweekly payments instead of monthly (equals one extra payment per year), 2) Round up your payments to the nearest $50 or $100, 3) Apply any windfalls (tax refunds, bonuses) directly to principal.
Is it better to save or pay off debt?
Generally, pay off high-interest debt (above 6-7%) before saving, except for employer 401(k) matches. The guaranteed 'return' from paying off a 15% credit card beats most investments. Balance debt payoff with maintaining an emergency fund.
Pro Tips
- Bookmark this calculator for quick access in the future
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- Try different scenarios to compare outcomes
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