Loan Calculator
Estimate your monthly loan payments, total interest, and view your amortization schedule. Perfect for personal, auto, or business loans.
Example Calculation
See how a $25,000 loan at 8.5% annual interest over 5 years is calculated.
The Formula
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Inputs Applied
Principal (P): $25,000
Monthly Rate (i): 0.085 / 12 = 0.007083
Total Months (n): 5 × 12 = 60
Step-by-Step Results
Monthly Payment: $512.91
Total Paid: $30,774.60
Total Interest: $5,774.60
Frequently Asked Questions
What is a loan amortization?
Amortization is the process of spreading out a loan into a series of fixed payments. Over time, the interest portion of each payment decreases while the principal portion increases.
How does interest rate affect my payment?
Higher interest rates increase the cost of borrowing, which raises your monthly payment and the total amount paid over the life of the loan.
What is the difference between APR and interest rate?
The interest rate is the percentage cost of borrowing the principal. The APR (Annual Percentage Rate) includes the interest rate plus any other fees or charges associated with the loan.
Should I choose a shorter or longer term?
Shorter terms have higher monthly payments but lower total interest. Longer terms have lower monthly payments but cost more in total interest.
What happens if I make extra payments?
Extra payments applied to the principal reduce the balance faster, which shortens the loan term and decreases the total interest you will pay.
How do I qualify for a lower interest rate?
Lenders typically offer lower rates to borrowers with high credit scores, stable income, and low debt-to-income ratios.
This calculator provides estimates for informational purposes only. Actual financial outcomes depend on specific contract terms and banking practices. Consult a qualified professional before making financial decisions.