Finance & Business
Loan Calculator
Calculate monthly payments, total interest, and view amortization schedules for any loan type.
Enter loan details to see payment calculations and amortization schedule
Related to Loan Calculator
Our loan calculator uses the standard loan amortization formula to determine your monthly payments and create a detailed repayment schedule. The calculator takes into account three primary factors: the loan amount (principal), annual interest rate, and loan term in years.
The Monthly Payment Formula
The monthly payment (PMT) is calculated using the formula: PMT = P * (r * (1 + r)^n) / ((1 + r)^n - 1), where: - P is the principal loan amount - r is the monthly interest rate (annual rate divided by 12) - n is the total number of payments (years * 12)
The calculator then generates an amortization schedule showing how each payment is split between principal and interest, and how the loan balance decreases over time. The visualization helps you understand the loan's behavior throughout its term, including total interest paid and the rate at which you build equity.
The calculator provides several key metrics to help you understand your loan's financial impact. The results include your monthly payment amount, total payment over the loan term, and total interest paid. The interactive graph shows how your loan balance decreases over time, helping you visualize your path to becoming debt-free.
Key Metrics Explained
- Monthly Payment: The fixed amount you'll pay each month - Total Payment: The sum of all payments over the loan term - Total Interest: The total cost of borrowing (total payment minus principal) - Amortization Chart: Shows your remaining balance at each year of the loan
Understanding these numbers helps you make informed decisions about loan terms and assess whether the loan payments fit within your budget. The visualization of the loan balance over time helps you understand how quickly you build equity and how much of your payment goes toward interest versus principal.
1. How can I lower my monthly loan payments?
You can lower your monthly payments by extending the loan term, finding a lower interest rate, making a larger down payment, or borrowing a smaller amount. However, note that extending the loan term will increase the total interest paid over the life of the loan.
2. What factors affect my loan interest rate?
Interest rates are typically influenced by your credit score, loan type, loan term, current market rates, loan amount, and debt-to-income ratio. A higher credit score and shorter loan term usually result in lower interest rates.
3. Should I choose a shorter or longer loan term?
A shorter loan term typically means higher monthly payments but less total interest paid. A longer term reduces monthly payments but increases the total cost of the loan. Choose based on your monthly budget and long-term financial goals.
4. What is amortization and why is it important?
Amortization is the process of paying off a loan through regular payments that cover both principal and interest. Early in the loan, a larger portion of each payment goes to interest. As time progresses, more of each payment goes toward the principal, helping you build equity faster.
5. What is the scientific source for this calculator?
This calculator uses the standard loan amortization formula widely accepted in financial mathematics and banking. The formula is derived from the time value of money principles established in financial theory and is used by financial institutions worldwide. The calculation methodology follows the compound interest formulas documented in financial textbooks and banking standards, including those published by the Financial Industry Regulatory Authority (FINRA) and the Federal Reserve System.