Loan Calculator
Calculate your monthly loan payment, total interest, and view an amortization summary. Enter your loan amount, annual interest rate, and loan term.
Loan Summary
Amortization Schedule ▼
How Does a Loan Calculator Work?
A loan calculator uses the standard amortization formula to determine your monthly payment based on the loan principal, annual interest rate, and loan term. Each monthly payment is split between paying off interest and reducing the principal balance.
The Loan Payment Formula
The monthly payment is calculated using: M = 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), and n is the total number of monthly payments.
Understanding Amortization
Amortization is the process of gradually paying off a loan through regular payments. In the early years, a larger portion of each payment goes toward interest. As the balance decreases, more of each payment is applied to the principal. This is why longer loan terms result in significantly more total interest paid.
Tips for Loan Planning
- Shorter loan terms mean higher monthly payments but less total interest
- Even a small reduction in interest rate can save thousands over the loan term
- Consider making extra principal payments to reduce total interest costs
- Use this calculator to compare different loan scenarios before committing