Loan Calculator
How to Use
Enter the loan amount, annual interest rate, and loan term in years. The monthly payment, total payment, and total interest are calculated instantly.
What is Loan Amortization?
Loan amortization is the process of paying off a debt through regular, fixed installments over a set period. Each payment covers both principal and interest. In the early stages of the loan, a larger portion of each payment goes toward interest, while later payments contribute more to reducing the principal balance. Understanding amortization helps borrowers see exactly how much they will pay in interest over the life of the loan and how extra payments can shorten the term and reduce total costs.
Calculation
Monthly payment is calculated using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate, and n is the total number of payments.
Common Use Cases
- Mortgage planning — estimate monthly payments before buying a home and compare 15-year vs. 30-year terms
- Auto loans — calculate total cost of financing a vehicle at different interest rates
- Student loans — understand repayment timelines and total interest for education debt
- Personal loans — compare offers from different lenders to find the best deal
- Refinancing — see how refinancing at a lower rate reduces your total payments
Tips for Comparing Loans
When comparing loan offers, focus on the total payment rather than just the monthly amount. A longer term lowers monthly payments but increases total interest significantly. Even a small difference in interest rate — say 0.5% — can add up to thousands over a 30-year mortgage. Try running several scenarios with different terms and rates to find the best balance between affordability and total cost.
Privacy
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