Loan Calculator
Loan Summary
Loan Details
Yearly Breakdown
| Year | Principal Paid | Interest Paid | Remaining Balance |
|---|---|---|---|
| 1 | $4,373.62 | $1,496.23 | $20,626.38 |
| 2 | $4,666.53 | $1,203.32 | $15,959.86 |
| 3 | $4,979.05 | $890.79 | $10,980.81 |
| 4 | $5,312.51 | $557.34 | $5,668.30 |
| 5 | $5,668.30 | $201.55 | $0.00 |
Total amount borrowed
Range: 1 - 30
Optional additional payment
Monthly Payment
$489.15
Total Payment
$29,349.22
Total Interest
$4,349.22
Payoff Time
5y 0m
Yearly Breakdown
| Year | Principal Paid | Interest Paid | Remaining Balance |
|---|---|---|---|
| 1 | $4,373.62 | $1,496.23 | $20,626.38 |
| 2 | $4,666.53 | $1,203.32 | $15,959.86 |
| 3 | $4,979.05 | $890.79 | $10,980.81 |
| 4 | $5,312.51 | $557.34 | $5,668.30 |
| 5 | $5,668.30 | $201.55 | $0.00 |
About the Loan Calculator
The Loan Calculator determines the fixed monthly payment on an amortizing loan based on the principal you borrow, the annual interest rate, and the term in months or years. It uses the standard amortization formula M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate, and n is the total number of payments. The result is the level payment that fully pays off the loan, principal and interest, by the end of the term.
Beyond the payment figure, the tool reveals the total interest you will pay over the life of the loan and the overall cost including principal. Early in an amortizing loan most of each payment goes toward interest, with the balance shifting toward principal over time. Understanding this front-loaded interest structure explains why making extra principal payments early saves disproportionately more interest than the same payment made years later.
This calculator suits mortgages, auto loans, personal loans, and student loans, anything with a fixed rate and regular payments. It complements the APY Calculator and CAGR Calculator on the earning side of finance, and pairs with the Savings Goal Calculator when you are weighing whether to save for a purchase or finance it. Comparing the total interest across different terms often reveals that a shorter term saves thousands despite the higher monthly payment.
A practical tip is to model several scenarios: a longer term lowers the monthly payment but raises total interest, while a shorter term does the opposite. Also try adding a modest extra monthly amount toward principal to see how dramatically it shortens the payoff timeline and cuts interest. Always confirm the rate you enter is the APR and includes any fees rolled into the financing for the most accurate comparison.
Frequently asked questions
- How is a monthly loan payment calculated?
- It uses the amortization formula M = P[r(1+r)^n]/[(1+r)^n - 1], where P is principal, r is the monthly rate, and n is the number of monthly payments.
- Why does most of my early payment go to interest?
- Interest is charged on the outstanding balance, which is highest at the start. As the balance shrinks, less of each payment covers interest and more goes to principal.
- Does a longer term mean a cheaper loan?
- No. A longer term lowers the monthly payment but increases the total interest paid over the life of the loan, often by a significant amount.
- How do extra payments help?
- Extra payments applied to principal reduce the balance faster, lowering future interest and shortening the payoff term, with the biggest savings coming from extra payments made early.
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