Finance
Loan Calculator
Calculate loan payments and total interest
FAQs
How is the monthly payment calculated?
Using the standard amortization formula based on principal, interest rate, and term. At 0% rate, it is principal divided by months.
What is an amortization schedule?
A month-by-month breakdown showing interest and principal portions of each payment and the remaining balance.
How to Use the Loan Calculator
Calculate monthly payments, total interest, and view a complete amortization schedule for any loan. Perfect for personal loans, car loans, student loans, and more.
- Enter the principal amount (the total amount you're borrowing).
- Enter the annual interest rate as a percentage.
- Enter the loan term in years or months (months is more precise).
- The calculator will automatically compute your monthly payment.
- View the total amount you'll pay over the life of the loan.
- Review the amortization schedule to see how much goes to principal vs. interest each month.
Loan Payment Formulas
Understanding how loan payments are calculated helps you make informed borrowing decisions.
Monthly Payment (EMI)
Where M is monthly payment, P is principal, r is monthly interest rate (annual rate ÷ 12), and n is number of payments.
Example:
Input: P = $10,000, r = 7% annually, n = 60 months
Calculation: M = 10,000 × [0.00583(1.00583)⁶⁰] / [(1.00583)⁶⁰ - 1]
Result: $198.01 per month
Total Interest Paid
The total amount paid minus the principal equals the total interest over the loan term.
Example:
Input: $198.01 × 60 months - $10,000
Calculation: $11,880.60 - $10,000
Result: $1,880.60 total interest
Total Amount Paid
Simply multiply the monthly payment by the number of payments.
Example:
Input: $198.01 × 60
Calculation: Total payments
Result: $11,880.60
Real-World Use Cases
Loan calculators help you plan and compare different loan options before committing to a lender.
Car Loan Comparison
Compare different loan offers from multiple lenders to find the best rate and terms.
Example: Compare a $25,000 car loan at 5% for 5 years vs. 6% for 4 years to see which has lower total cost
Personal Loan Planning
Determine if you can afford a personal loan payment before applying.
Example: Calculate if a $15,000 loan at 8% for 3 years fits your monthly budget
Debt Consolidation
Evaluate whether consolidating multiple debts into a single loan saves money.
Example: Compare total interest paid on multiple credit cards vs. one consolidated loan
Student Loan Planning
Plan repayment strategies and understand long-term costs of student loans.
Example: Calculate monthly payments for $50,000 student loan at 6% over 10 years
Home Improvement Loans
Budget for home renovations by calculating monthly payment impacts.
Example: Determine monthly payment for a $20,000 home improvement loan at 7% for 7 years
Tips & Best Practices
Tips
- Always compare multiple loan offers - even a 0.5% difference in interest rate can save thousands over the loan term.
- Shorter loan terms result in higher monthly payments but lower total interest paid.
- Consider making extra payments toward principal to pay off loans faster and save on interest.
- Review the amortization schedule to see how much interest you're paying in early years.
- Factor in loan origination fees and other costs when comparing loan options.
Common Mistakes to Avoid
- Only looking at monthly payment without considering total interest paid over the loan term.
- Not accounting for variable interest rates that may increase over time.
- Borrowing more than necessary without considering the long-term financial impact.
- Ignoring prepayment penalties when planning to pay off loans early.
- Not comparing the actual interest rate (APR) - some lenders quote lower rates but include hidden fees.