Finance Tools/Loan Calculator
Loan Calculator
Calculate equal payment and equal principal amortization
Loan Information
%
months
Result
Enter values
Loan Calculator Guide
Calculate monthly payments and total loan costs
What is a Loan Calculator?
A loan calculator helps you understand the true cost of borrowing by calculating monthly payments, total interest paid, and amortization schedules. It's essential for comparing loan offers and making informed borrowing decisions.
How to Use This Calculator
- Enter the loan principal amount
- Input the annual interest rate
- Specify the loan term in months or years
- View monthly payment and total cost breakdown
Borrowing Tips
- A shorter loan term means higher payments but less total interest
- Even small rate differences significantly impact total cost
- Consider making extra payments to reduce interest costs
Calculation Method
Uses the standard amortization formula: M = P[r(1+r)^n]/[(1+r)^n-1] where M is monthly payment, P is principal, r is monthly rate, and n is number of payments.
Frequently Asked Questions
What is the difference between equal payment and equal principal loans?
Equal payment (fixed-rate) loans have the same monthly payment throughout, but early payments are mostly interest. Equal principal loans reduce the principal equally each month, resulting in decreasing total payments over time. Equal principal loans pay less total interest but have higher initial payments.
How much does a 1% interest rate difference actually cost?
On a $300,000 30-year mortgage, a 1% difference is significant: at 6% you pay $1,799/month and $647,515 total; at 7% you pay $1,996/month and $718,527 total. That 1% costs an extra $71,012 over the life of the loan—nearly 24% of the original principal.
Should I choose a 15-year or 30-year mortgage term?
A 15-year mortgage has higher monthly payments but significantly lower total interest. For $300,000 at 6%: 15-year costs $2,532/month with $155,683 total interest; 30-year costs $1,799/month but $347,515 total interest. Choose based on your monthly budget and long-term savings goals.
How do extra payments affect my loan payoff?
Extra payments can dramatically reduce your loan term and total interest. On a $300,000 30-year loan at 6%, adding just $200/month to your payment saves $62,000 in interest and pays off the loan 6 years early. Specify extra payments go toward principal for maximum impact.
What factors determine my mortgage interest rate?
Key factors include: credit score (higher scores get lower rates), down payment size (larger down payments reduce risk), loan term (shorter terms often have lower rates), loan type (fixed vs. adjustable), and current market conditions. Improving your credit score by 50 points could save thousands over the loan term.