Loan Calculator
Calculate loan payments, total interest, and see your complete amortization schedule. Perfect for mortgages, car loans, personal loans, and student loans. Compare different scenarios and make informed borrowing decisions.
What is a Loan?
A loan is money borrowed from a lender that must be repaid with interest over a specified period. Loans can be used for various purposes including buying a home (mortgage), purchasing a vehicle (auto loan), paying for education (student loan), or covering personal expenses (personal loan). Understanding loan terms and payments is crucial for making sound financial decisions.
How Loan Payments Work
Most loans use an amortization schedule, where you make fixed monthly payments. Each payment is split between principal (the amount borrowed) and interest (the cost of borrowing). Early payments have more interest; later payments have more principal. This is why extra payments toward principal can save significant interest.
M = P × [r(1+r)^n] / [(1+r)^n - 1]
P = Principal (loan amount)
r = Monthly interest rate (annual rate ÷ 12)
n = Number of payments (years × 12)
Types of Loans
Long-term loans (15-30 years) for purchasing real estate. Secured by the property itself. Typically lowest interest rates.
Medium-term loans (3-7 years) for vehicles. Secured by the car. Moderate interest rates based on credit.
Short to medium-term (1-5 years) for various purposes. Usually unsecured. Higher interest rates.
Education financing (10-25 years). Federal loans have fixed rates. Private loans vary by lender.
Key Loan Terms Explained
- Principal: The original amount borrowed, excluding interest
- Interest Rate: The percentage charged on the loan, usually annual (APR)
- Term: The length of time to repay the loan (e.g., 30 years)
- Monthly Payment: Fixed amount paid each month (principal + interest)
- Amortization: The process of paying off debt through regular payments
- APR (Annual Percentage Rate): Total cost of borrowing including fees
- Down Payment: Initial payment that reduces the loan amount
- Secured Loan: Loan backed by collateral (house, car)
- Unsecured Loan: Loan based on creditworthiness only
- Fixed Rate: Interest rate stays the same throughout the loan
- Variable Rate: Interest rate can change over time
Benefits of Extra Payments
Making extra payments toward your loan principal can save thousands in interest and years of payments:
- Reduce total interest: Less time paying interest means lower total cost
- Pay off loan faster: Extra payments directly reduce the principal balance
- Build equity faster: Important for mortgages and auto loans
- Reduce financial stress: Debt-free sooner improves financial security
- Improve credit score: Lower debt-to-income ratio helps credit
Example: Extra Payment Impact
$200,000 loan at 6.5% for 30 years
Monthly: $1,264
Total Interest: $255,088
Total: $455,088
Same loan with extra payments
Monthly: $1,464
Total Interest: $179,008
Total: $379,008
Save $76,080 in interest and pay off 9 years early with just $200 extra per month!
Tips for Getting the Best Loan
- Improve your credit score: Higher scores get better interest rates
- Shop around: Compare offers from multiple lenders
- Make a larger down payment: Reduces loan amount and may lower rate
- Choose the right term: Shorter terms have higher payments but less interest
- Consider total cost: Don't just look at monthly payment
- Read the fine print: Check for prepayment penalties and fees
- Get pre-approved: Helps with negotiating and budgeting
- Avoid unnecessary add-ons: Extra insurance or warranties increase cost
- Lock in good rates: When rates are favorable, act quickly
- Budget for other costs: Property taxes, insurance, maintenance
Loan Comparison: 15-Year vs 30-Year
| Feature | 15-Year Loan | 30-Year Loan |
|---|---|---|
| Monthly Payment | Higher | Lower |
| Total Interest Paid | Much lower | Much higher |
| Interest Rate | Usually lower | Usually higher |
| Equity Building | Faster | Slower |
| Financial Flexibility | Less (higher payment) | More (lower payment) |
| Debt-Free Date | 15 years | 30 years |
Frequently Asked Questions
What's the difference between interest rate and APR?
Interest rate is the cost of borrowing expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate plus other fees and costs, giving you the true cost of the loan. Always compare APRs when shopping for loans.
Should I choose a 15-year or 30-year mortgage?
15-year mortgages have higher monthly payments but save significant interest and build equity faster. 30-year mortgages have lower payments and more financial flexibility. Choose based on your budget, financial goals, and how long you plan to stay in the home.
Can I pay off my loan early?
Most loans allow early payoff, but some have prepayment penalties. Check your loan agreement. Extra payments toward principal can save thousands in interest. Even small additional payments make a big difference over time.
How much should my down payment be?
For mortgages, 20% down avoids PMI (private mortgage insurance) and gets better rates. For cars, 10-20% is typical. Larger down payments reduce your loan amount, monthly payment, and total interest paid.
What credit score do I need for a good loan rate?
Generally, 740+ gets the best rates. 670-739 is good. 580-669 is fair with higher rates. Below 580 is poor and may struggle to qualify. Improving your score by even 20-40 points can save thousands in interest.
Is my loan data stored or shared?
No, all calculations happen entirely in your browser using JavaScript. Your financial information never leaves your device and is not stored or transmitted anywhere.