Loan Calculator
Calculate monthly payments, total interest, and amortization schedule.
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What is this tool?
A loan calculator helps you estimate monthly payments, total interest, and total cost for any loan. By entering the principal amount, annual interest rate, and loan term, it uses the amortization formula to compute your fixed monthly payment and generates a complete repayment schedule showing principal and interest breakdown per period.
When to use this tool
Mortgage planning
Before applying for a home loan, compare how different interest rates and terms affect your monthly budget. Test scenarios from 15-year to 30-year fixed mortgages to find the sweet spot.
Auto loan comparison
When buying a car, use the loan calculator to compare dealer financing vs. bank auto loans. See how a 0.5% lower rate can save thousands over the life of the loan.
Student loan analysis
Plan your education expenses by calculating different repayment scenarios. Understand how income-driven repayment plans compare to standard 10-year repayment.
Personal loan affordability
Before taking a personal loan, check if the monthly payment fits your budget. A good rule of thumb is that debt payments should not exceed 36% of your gross monthly income.
How to use
- 1
Enter loan amount
Type the total principal amount you are borrowing.
- 2
Set interest rate
Enter the annual interest rate as a percentage.
- 3
Choose loan term
Select the loan duration in years or months.
- 4
View results
See monthly payment, total interest, total cost, and the full amortization schedule.
Frequently Asked Questions
How is monthly loan payment calculated?
Monthly payment = P ร [r(1+r)^n] / [(1+r)^n - 1], where P is principal, r is monthly interest rate (annual rate รท 12), and n is total number of payments. This is the standard amortization formula used for fixed-rate loans.
What affects my monthly payment the most?
The loan term has the biggest impact. Extending the term significantly reduces monthly payments but increases total interest paid. A higher interest rate also raises payments substantially. The principal amount directly scales the payment amount.
Should I choose a shorter or longer loan term?
Shorter terms mean higher monthly payments but significantly less total interest. Longer terms lower monthly payments but cost more overall. Choose based on your cash flow comfort and total cost sensitivity. A common strategy is to choose the shortest term you can comfortably afford.
What is a good loan interest rate?
A "good" rate depends on the loan type and your credit score. For 2024-2025, good rates are roughly: mortgage 5-7%, auto loan 4-8%, personal loan 6-12%, student loan 3-8%. Borrowers with credit scores above 720 typically qualify for the best rates. Shop around among multiple lenders โ even a 0.5% difference can save thousands over the life of the loan.
Should I pay off my loan early?
Early payoff eliminates future interest payments, which can save significant money โ especially on high-interest loans. However, consider the opportunity cost: if you could invest that money at a higher return than your loan rate, it may be better to invest instead. Also check for prepayment penalties. For low-rate mortgages (below 4%), keeping the loan and investing extra money may be mathematically optimal.
What documents do I need to apply for a loan?
Typical documents include: government-issued ID, proof of income (pay stubs, tax returns, or bank statements), employment verification, proof of address, and credit report authorization. For mortgages, additional documents like property appraisal, down payment source documentation, and debt-to-income calculation may be required. Having these ready speeds up the approval process.