Loan Calculator
Calculate monthly payments, total interest cost, and amortized balance schedules
| Month | Payment | Principal | Interest | Remaining |
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How to Use This Loan Calculator
- Enter the total requested balance in Loan Amount ($).
- Provide the fixed interest rate offered by the lender in Interest Rate (% Annual).
- Specify the repayment duration in Loan Term (Years) (e.g., 15 or 30 years for mortgages, 3 to 6 years for auto loans).
- Optionally enter an Extra Monthly Payment ($) to evaluate principal acceleration benefits.
- Click “Calculate Loan Schedule” to inspect total interest paid, loan payoff date adjustments, and individual monthly breakdowns.
The Amortization Formula
Standard fixed-rate installment loans utilize the annuity amortization formula to determine the fixed monthly payment ($PMT$):
Where: P = Principal Loan Amount, i = Monthly Interest Rate (Annual Rate ÷ 12), n = Total Number of Monthly Payments (Years × 12).
Frequently Asked Questions (FAQ)
How do extra monthly principal payments reduce overall costs?
Because interest is calculated based on your remaining principal balance, applying extra money directly to the principal reduces monthly interest charges for every subsequent period, accelerating debt-free timeline goals.
What is the difference between APR and interest rate?
The annual percentage rate (APR) includes both the base interest rate and additional mandatory fees charged by the lender (such as origination costs or mortgage insurance), providing a broader picture of true annual borrowing costs.
Why is interest so high in the first years of a long-term loan?
Amortization structures calculate interest based on the total outstanding principal balance. Since the balance is highest at the beginning of the loan term, the majority of early payments go toward interest rather than equity build-up.