Calculate your loan payments and interest
Our free loan calculator helps you understand the true cost of borrowing money by calculating monthly payments, total interest, and overall loan costs. Whether you're considering a mortgage, auto loan, personal loan, or student loan, this calculator provides clear insights into your financial obligations, helping you make informed borrowing decisions.
Using our loan calculator is simple and straightforward. First, enter the loan amount (principal) you want to borrow or are considering. Next, input the annual interest rate percentage - this is the rate your lender charges per year. Then, specify the loan term in years - how long you'll take to repay the loan. Click the "Calculate" button to instantly see your monthly payment, total payment over the loan term, and total interest charges. These results help you understand exactly what you'll pay for your loan. You can adjust any value to see how changing loan terms affects your payments, making it easy to compare different loan scenarios.
Loan calculations use the amortization formula to determine monthly payments. The formula considers the principal amount, interest rate, and loan term to calculate equal monthly payments that pay off both principal and interest over time. Monthly Payment = P × [r(1+r)^n] / [(1+r)^n-1], where P is principal, r is monthly interest rate (annual rate ÷ 12), and n is total number of payments (years × 12). Early payments consist mostly of interest with small principal reduction. As the loan matures, more of each payment goes toward principal. This amortization schedule ensures the loan is fully repaid by the final payment.
Different loan types serve various financial needs. Mortgages are loans for purchasing real estate, typically spanning 15 to 30 years with lower interest rates due to property collateral. Auto loans finance vehicle purchases, usually lasting 3 to 7 years with moderate rates. Personal loans provide unsecured financing for any purpose, often carrying higher interest rates due to lack of collateral. Student loans help pay education costs, offering lower rates and flexible repayment options. Business loans fund company operations or expansion. Home equity loans leverage property value for cash access. Each loan type has unique characteristics, but our calculator works for all by using the fundamental amortization formula.
Interest rates represent the cost of borrowing money, expressed as an annual percentage. Lenders charge interest to profit from loans and compensate for risk. Rates vary based on loan type, term, credit score, and market conditions. Fixed rates remain constant throughout the loan term, providing payment stability. Variable rates fluctuate with market indexes, potentially changing monthly payments. APR (Annual Percentage Rate) includes interest and fees, showing the true loan cost. Lower rates significantly reduce total interest paid over the loan term. Even a 1% rate difference can save thousands of dollars on large loans. Shopping around for the best rate is crucial for minimizing borrowing costs.
Loan term length dramatically impacts monthly payments and total interest. Shorter terms mean higher monthly payments but substantially less total interest paid. Longer terms offer lower monthly payments but significantly increase total interest costs. For example, a $200,000 mortgage at 4% for 15 years has higher monthly payments than the same loan for 30 years, but saves over $80,000 in interest. Consider your budget, income stability, and long-term financial goals when choosing loan terms. Shorter terms build equity faster and free you from debt sooner. Longer terms provide monthly budget flexibility but extend financial obligations. Use our calculator to compare different term scenarios before committing.
Lenders evaluate multiple factors when approving loans. Credit score is crucial - higher scores indicate reliable borrowers and qualify for better rates. Income level and stability demonstrate ability to make payments. Debt-to-income ratio shows how much of your income goes toward debt obligations. Employment history reveals job stability. Down payment size affects loan amount and lender risk. Loan purpose and collateral value matter for secured loans. Payment history on existing debts shows financial responsibility. Improving these factors before applying can significantly improve loan terms and approval chances. Our calculator helps you determine comfortable payment amounts within your budget before applying.
Making extra loan payments can dramatically reduce total interest and shorten loan terms. Even small additional payments applied to principal accelerate payoff. For example, paying an extra $100 monthly on a $200,000, 30-year mortgage at 4% saves over $30,000 in interest and shortens the term by 5 years. Some effective strategies include: making biweekly half-payments instead of monthly payments (equivalent to 13 monthly payments yearly), applying bonuses or tax refunds to principal, rounding up monthly payments, or refinancing to shorter terms when financially feasible. Always specify extra payments should apply to principal, not future payments. Check loan agreements for prepayment penalties before implementing aggressive payoff strategies.
Refinancing replaces an existing loan with a new one, potentially offering better terms. Common refinancing reasons include: securing lower interest rates to reduce monthly payments or total interest, changing loan terms to pay off debt faster or lower payments, switching from variable to fixed rates for payment stability, or accessing equity through cash-out refinancing. However, refinancing involves closing costs, origination fees, and appraisal expenses that must be recouped through savings to make financial sense. Calculate the breakeven point - how long it takes for savings to exceed refinancing costs. If you plan to keep the loan past breakeven, refinancing makes sense. Our calculator helps compare current loan costs to potential refinanced loan scenarios.
Smart loan shopping can save thousands of dollars. Get quotes from multiple lenders including banks, credit unions, and online lenders. Compare APR rather than just interest rates to see true costs including fees. Negotiate rates and fees - everything is potentially negotiable. Improve your credit score before applying to qualify for better rates. Consider loan terms carefully based on your financial situation. Read all fine print for prepayment penalties, late fees, and other terms. Time applications within a short period (14-45 days) so multiple credit inquiries count as one for credit scoring purposes. Use our calculator to determine maximum comfortable payment amounts before shopping, helping you avoid overextending financially.
Your privacy and financial information security are paramount. All calculations happen entirely in your browser using JavaScript - no data is transmitted to servers or stored anywhere. We don't collect, record, or share any financial information you enter. The calculator works completely offline once loaded. You can safely explore different loan scenarios without privacy concerns or commitment. This tool is provided for educational and planning purposes - always consult with qualified financial advisors before making major borrowing decisions.