Loan Calculator

Use this loan calculator to estimate your monthly loan payment, total interest, and total repayment amount based on the amount you borrow, interest rate, and loan term.

A loan calculator can help you compare borrowing options before applying for a loan. Enter the loan amount, annual interest rate, and repayment term to see how changes in each factor may affect your estimated payment and overall borrowing cost.

How Loan Payments Are Calculated

For a standard fixed-rate installment loan, the monthly principal-and-interest payment is primarily determined by three factors: the loan amount, interest rate, and number of payments.

The standard monthly loan payment formula is:

M = P × [r(1 + r)^n] ÷ [(1 + r)^n - 1]

Where:

- M is the monthly principal-and-interest payment - P is the principal, or amount borrowed - r is the monthly interest rate expressed as a decimal - n is the total number of monthly payments

You do not need to calculate the formula manually. Enter your loan details into the calculator above to estimate the payment automatically.

How the Loan Amount Affects Your Payment

The loan amount is the principal you borrow. Assuming the interest rate and loan term remain the same, borrowing a larger amount generally increases both the monthly payment and the total interest paid.

Reducing the amount financed can therefore reduce borrowing costs. Depending on the type of loan, this may mean choosing a less expensive purchase, making a larger down payment, or borrowing less than the maximum amount available.

How Interest Rates Affect Loan Payments

The interest rate represents the cost of borrowing money. A higher interest rate generally increases the monthly payment and total interest cost, while a lower rate generally reduces them when the other loan terms remain the same.

Even a relatively small difference in interest rate can have a meaningful effect on a large loan or a loan repaid over many years. When comparing offers, consider the interest rate, APR, fees, monthly payment, and total borrowing cost rather than looking only at the required monthly payment.

How Loan Term Affects Monthly Payments

The loan term is the amount of time available to repay the debt.

A shorter loan term generally produces a higher monthly payment because the principal must be repaid over fewer months. However, paying the balance faster can reduce total interest when the loan amount and interest rate are otherwise the same.

A longer loan term generally lowers the required monthly payment by spreading repayment across more months. The trade-off is that the borrower may pay more interest over the life of the loan.

For this reason, the lowest monthly payment is not necessarily the lowest-cost loan.

Monthly Payment vs. Total Interest

When comparing loans, consider both short-term affordability and long-term cost.

For example, extending a loan from 60 months to 72 months may reduce the monthly payment. However, the additional 12 months of repayment can increase the total interest paid.

A useful loan comparison should consider:

- Monthly payment - Total interest - Total repayment amount - Interest rate or APR - Loan term - Applicable fees

Use the calculator to test multiple scenarios. Try changing the interest rate or repayment term while keeping the loan amount the same to see how each variable affects the results.

What Types of Loans Can This Calculator Estimate?

This calculator is designed for standard installment-loan scenarios with regular payments. It can be useful for estimating payments on borrowing such as:

- Personal loans - Auto loans - Fixed-rate installment loans - Other loans with a defined principal, interest rate, and repayment term

Specialized loans may require additional calculations. Mortgages, for example, can involve property taxes, homeowners insurance, mortgage insurance, and other costs. Some auto loans may include taxes, fees, or optional products in the amount financed.

Variable-rate loans, interest-only loans, balloon loans, and other nonstandard loan structures may also require different calculations.

How to Use the Loan Calculator

To estimate your loan payment:

1. Enter the amount you plan to borrow. 2. Enter the annual interest rate. 3. Select or enter the repayment term. 4. Review the estimated monthly payment. 5. Compare the total interest and total repayment amount. 6. Change the rate or term to compare alternative scenarios.

When comparing options, avoid choosing a loan based only on the lowest monthly payment. A longer repayment term can make a payment look more affordable while increasing the total cost of borrowing.

Understanding Amortization

Many fixed-rate installment loans are amortizing loans. Each scheduled payment includes both principal and interest.

Early in the repayment period, a larger portion of the payment typically goes toward interest because the outstanding principal balance is higher. As the balance declines, the interest portion generally decreases and more of the payment goes toward principal.

An amortization schedule can help you see how the loan balance changes over time and how each payment is divided between principal and interest.

Loan Calculator Limitations

The results from this calculator are estimates based on the information entered.

Actual lender calculations may differ because of rounding, payment dates, interest calculation methods, fees, or other loan-specific terms.

The calculator may not include:

- Origination or lender fees - Taxes - Insurance - Late fees - Prepayment penalties - Optional financial products - Other charges associated with a specific loan

Always review the lender's actual loan disclosure and repayment terms before making a borrowing decision.