Loan Calculator
Calculate monthly payments, total interest, and amortization for mortgages, auto loans, and personal loans
See how extra payments reduce interest and payoff time
Additional amount to pay each month
Compare up to 3 different loan offers
Loan Option 1
Loan Option 2
Loan Option 3
Calculate maximum loan based on monthly payment you can afford
What Is a Loan Calculator?
A loan calculator is a financial tool that helps you determine your monthly loan payments, total interest costs, and overall loan expenses based on the loan amount, interest rate, and repayment term. Whether you're considering a mortgage, auto loan, personal loan, or student loan, this calculator provides instant insights into what you'll actually pay over the life of the loan. Understanding these numbers before you borrow helps you make informed decisions about how much to borrow and whether you can afford the payments.
The calculator uses the standard amortization formula to compute fixed monthly payments that include both principal and interest. Each payment gradually reduces your loan balance while covering the interest charges. By seeing the breakdown of total payments, interest costs, and how much goes toward principal versus interest, you gain a complete picture of the true cost of borrowing. This transparency empowers you to compare loan offers, negotiate better terms, and plan your budget effectively.
How to Use This Calculator
Enter the Loan Amount
Input the total amount you want to borrow (the principal). For a mortgage, this is typically the home price minus your down payment. For other loans, it's the amount you need to finance.
Enter the Annual Interest Rate
Specify the annual percentage rate (APR) offered by your lender. This is the yearly interest rate, not the monthly rate. The calculator will convert it to a monthly rate automatically.
Enter the Loan Term
Input the length of the loan in years. Common terms are 30 years for mortgages, 5-7 years for auto loans, and 3-5 years for personal loans.
Click Calculate
Press the "Calculate Loan Payment" button to see your monthly payment, total interest, total payment amount, and a sample amortization schedule showing how your payments are applied.
Review Your Results
Analyze the monthly payment to ensure it fits your budget, review the total interest to understand the true cost of borrowing, and examine the amortization schedule to see how your loan balance decreases over time.
Key Features
Instant Calculations
Get immediate loan payment calculations with no delays. See your monthly payment, total interest, and amortization instantly.
Detailed Breakdown
View comprehensive results including monthly payment, total interest, total payment, and a sample amortization schedule for the first year.
100% Private
All calculations happen in your browser. Your financial information never leaves your device, ensuring complete privacy and security.
Mobile Friendly
Calculate loan payments from any device—desktop, tablet, or smartphone. Responsive design works seamlessly everywhere.
Why Use This Tool?
Budget with Confidence
Before taking on any loan, you need to know if you can afford the monthly payments. This calculator shows you exactly what you'll pay each month, allowing you to assess whether it fits comfortably within your budget. By testing different loan amounts and terms, you can find the right balance between borrowing what you need and keeping payments manageable. This prevents you from overextending yourself financially and helps ensure you can meet your obligations without stress. Knowing your payment amount also helps you plan for other expenses and savings goals.
Compare Loan Offers
Different lenders offer different interest rates and terms, and small differences can add up to thousands of dollars over the life of a loan. Use this calculator to compare multiple loan offers side by side. A loan with a slightly lower interest rate might save you significant money, even if the monthly payment difference seems small. Similarly, you can see how choosing a shorter or longer loan term affects both your monthly payment and total interest paid. This comparison shopping empowers you to negotiate better terms and choose the most cost-effective loan option.
Understand the True Cost of Borrowing
The sticker price of a loan is just the beginning—the real cost includes all the interest you'll pay over time. This calculator reveals the total amount you'll pay back, which can be significantly more than the original loan amount, especially for long-term loans like mortgages. Seeing the total interest cost helps you understand what borrowing actually costs and motivates you to consider strategies like making extra payments or choosing shorter loan terms to reduce interest expenses. This transparency prevents surprises and helps you make financially sound decisions.
Plan Your Financial Future
Understanding your loan payments helps you plan for the future with greater accuracy. You can see how taking on a loan affects your monthly cash flow and long-term financial goals. The amortization schedule shows how your loan balance decreases over time, helping you understand when you'll build equity (for mortgages) or own an asset outright (for auto loans). This forward-looking perspective helps you make strategic decisions about when to borrow, how much to borrow, and how aggressively to pay down debt to achieve your financial objectives.
Practical Examples
Example 1: 30-Year Mortgage
Loan Amount: $300,000
Annual Interest Rate: 6.5%
Loan Term: 30 years
Results:
Monthly Payment: $1,896.20
Total Interest: $382,633.00
Total Payment: $682,633.00
Over 30 years, you'll pay more in interest than the original loan amount. Consider a 15-year term to save significantly on interest.
Example 2: 5-Year Auto Loan
Loan Amount: $30,000
Annual Interest Rate: 4.5%
Loan Term: 5 years
Results:
Monthly Payment: $559.15
Total Interest: $3,549.00
Total Payment: $33,549.00
Reasonable interest cost for a 5-year auto loan. Ensure the monthly payment fits comfortably in your budget along with insurance and maintenance.
Example 3: 3-Year Personal Loan
Loan Amount: $15,000
Annual Interest Rate: 8.5%
Loan Term: 3 years
Results:
Monthly Payment: $472.81
Total Interest: $2,021.16
Total Payment: $17,021.16
The shorter term keeps total interest relatively low despite the higher rate. Pay off high-interest debt as quickly as possible.
Understanding the Formula
Loan payments are calculated using the amortization formula, which ensures you pay off both principal and interest over the loan term with equal monthly payments. Here's how it works:
Loan Payment Formula:
Monthly Rate = Annual Rate ÷ 12
Number of Payments = Years × 12
Monthly Payment = P × [r(1+r)^n] ÷ [(1+r)^n - 1]
Where P = Principal, r = Monthly Rate, n = Number of Payments
Principal
The principal is the original loan amount you borrow. This is the base amount on which interest is calculated. As you make payments, your principal balance decreases, which means you pay less interest over time even though your monthly payment stays the same.
Interest Rate
The annual interest rate is converted to a monthly rate by dividing by 12. This monthly rate is applied to your remaining balance each month to calculate the interest portion of your payment. In the early years of a loan, most of your payment goes toward interest. As the balance decreases, more goes toward principal.
Loan Term
The loan term in years is converted to the number of monthly payments by multiplying by 12. Longer terms result in lower monthly payments but higher total interest. Shorter terms mean higher monthly payments but less interest paid overall. The term you choose significantly impacts both affordability and total cost.
Amortization
Amortization is the process of paying off a loan through regular payments over time. Each payment includes both principal and interest, with the proportion shifting over the loan's life. Early payments are mostly interest, while later payments are mostly principal. An amortization schedule shows this breakdown for each payment, helping you see how your loan balance decreases and how much equity you're building.
Tips & Best Practices
Shop Around for the Best Interest Rate
Even a small difference in interest rates can save you thousands of dollars over the life of a loan. Get quotes from multiple lenders—banks, credit unions, and online lenders—and compare not just rates but also fees and terms. Your credit score significantly affects the rate you'll receive, so check your credit report and address any issues before applying. Don't be afraid to negotiate; lenders often have flexibility, especially if you have competing offers. A 0.5% rate reduction on a $300,000 mortgage can save you over $30,000 in interest over 30 years.
Consider Shorter Loan Terms
While longer loan terms offer lower monthly payments, they cost significantly more in total interest. If you can afford higher monthly payments, choosing a shorter term (like 15 years instead of 30 for a mortgage, or 3 years instead of 5 for a personal loan) can save you tens of thousands of dollars. Use the calculator to compare different terms and see the trade-off between monthly payment and total interest. Even if you choose a longer term for flexibility, you can always make extra payments to pay off the loan faster.
Make Extra Payments When Possible
Making extra payments toward your principal can dramatically reduce the total interest you pay and shorten your loan term. Even small additional payments add up over time. For example, paying an extra $100 per month on a $200,000 mortgage at 6% can save you over $50,000 in interest and pay off the loan 7 years early. Make sure your lender applies extra payments to principal, not future payments. Some loans have prepayment penalties, so check your loan terms before making extra payments.
Factor in All Costs, Not Just the Payment
Your monthly loan payment is just one part of the total cost of ownership. For mortgages, add property taxes, insurance, HOA fees, and maintenance costs. For auto loans, include insurance, fuel, maintenance, and registration. For any loan, consider opportunity cost—money spent on loan payments can't be invested elsewhere. Create a comprehensive budget that accounts for all these expenses to ensure you can truly afford the loan. A payment that seems manageable in isolation might strain your budget when you consider the full picture.
Common Mistakes to Avoid
❌ Focusing Only on Monthly Payment
Many borrowers choose loans based solely on whether they can afford the monthly payment, without considering the total interest cost. A lower monthly payment achieved through a longer loan term can cost you tens of thousands more in interest over time.
✓ Correction:
Look at both the monthly payment and the total amount you'll pay over the loan's life. Use the calculator to compare different loan terms and see how they affect total interest. Choose the shortest term you can comfortably afford to minimize interest costs while keeping payments manageable.
❌ Not Accounting for Additional Costs
The loan payment calculator shows principal and interest, but many loans have additional costs like origination fees, closing costs, PMI (for mortgages), or prepayment penalties. Ignoring these costs gives you an incomplete picture of what you'll actually pay.
✓ Correction:
Ask lenders for a complete breakdown of all fees and costs associated with the loan. For mortgages, get a Loan Estimate form that details all costs. Factor these additional expenses into your budget and total cost comparison when evaluating loan offers. Some fees can be negotiated or shopped around.
❌ Borrowing the Maximum Amount Approved
Just because a lender approves you for a certain amount doesn't mean you should borrow that much. Lenders use formulas that might not account for your specific financial situation, goals, or other obligations. Maxing out your borrowing capacity leaves no room for emergencies or unexpected expenses.
✓ Correction:
Determine what you can comfortably afford based on your actual budget, not the lender's maximum. Leave room for savings, emergencies, and other financial goals. A good rule of thumb is to keep total debt payments (including the new loan) below 36% of your gross income, and ideally lower. Borrow what you need, not what you're approved for.
Frequently Asked Questions
How accurate is this loan calculator?
This calculator provides accurate estimates of monthly payments, total interest, and total payment amounts based on the standard amortization formula used by most lenders. However, your actual payment may vary slightly due to factors like rounding, payment timing, or additional fees. For mortgages, the calculator shows principal and interest only—your actual payment will be higher if it includes property taxes, insurance, HOA fees, or PMI. Always get an official Loan Estimate from your lender for the most accurate numbers, but use this calculator for planning and comparison purposes.
What's the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal, expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate plus other costs like origination fees, points, and certain closing costs, giving you a more complete picture of the loan's true cost. This calculator uses the interest rate to calculate payments. When comparing loans, look at both—a loan with a lower interest rate but high fees might have a higher APR than a loan with a slightly higher interest rate but lower fees. APR helps you compare the total cost of different loan offers.
Should I choose a 15-year or 30-year mortgage?
The choice depends on your financial situation and goals. A 15-year mortgage has higher monthly payments but significantly lower total interest—you'll save tens of thousands of dollars and own your home faster. A 30-year mortgage offers lower monthly payments, providing more flexibility in your budget and allowing you to invest money elsewhere. If you can comfortably afford the higher payment of a 15-year mortgage without sacrificing other financial goals, it's usually the better choice. However, if the higher payment would strain your budget or prevent you from saving for retirement or emergencies, a 30-year mortgage with extra payments when possible might be smarter.
How do extra payments affect my loan?
Extra payments applied to principal reduce your loan balance faster, which decreases the total interest you pay and shortens your loan term. For example, adding just $100 per month to a $200,000, 30-year mortgage at 6% saves about $50,000 in interest and pays off the loan 7 years early. The impact is greatest early in the loan when your balance is highest. Make sure your lender applies extra payments to principal, not future payments. Some loans have prepayment penalties, so check your loan agreement. Even irregular extra payments (like tax refunds or bonuses) can make a significant difference over time.
What credit score do I need to get a good interest rate?
Credit scores significantly impact the interest rate you'll receive. Generally, scores above 740 qualify for the best rates, while scores below 620 may face higher rates or difficulty qualifying. The difference can be substantial—a borrower with a 760 score might get a 6% rate, while someone with a 620 score might pay 7.5% or more on the same loan. On a $300,000 mortgage, that 1.5% difference costs about $100,000 more in interest over 30 years. Before applying for a loan, check your credit report, correct any errors, and work on improving your score if needed. Even a small score improvement can save you thousands.
Is it better to pay off my loan early or invest the money?
This depends on your loan's interest rate, potential investment returns, and risk tolerance. If your loan has a high interest rate (above 6-7%), paying it off early provides a guaranteed "return" equal to that rate and reduces financial stress. If your rate is low (below 4%), you might earn more by investing the money, especially in tax-advantaged retirement accounts. However, investment returns aren't guaranteed, while loan interest is a certain cost. Consider your overall financial picture—prioritize high-interest debt, maintain an emergency fund, maximize employer retirement matches, then decide between extra loan payments and additional investing based on rates and your comfort with debt.
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Conclusion
Understanding your loan payments before you borrow is essential for making smart financial decisions. Whether you're considering a mortgage, auto loan, personal loan, or any other type of financing, knowing your monthly payment, total interest cost, and overall loan expense helps you budget effectively, compare offers, and avoid overextending yourself financially. A loan calculator transforms complex amortization formulas into clear, actionable information that empowers you to take control of your borrowing decisions.
Our free loan calculator provides instant, accurate calculations with complete privacy—all processing happens in your browser, so your financial information never leaves your device. The detailed results include not just your monthly payment, but also total interest, total payment amount, and a sample amortization schedule showing how your payments are applied over time. This comprehensive view helps you understand the true cost of borrowing and make informed choices about loan amounts, terms, and lenders.
Remember that a loan calculator is a planning tool, not a substitute for professional financial advice. Use it to explore different scenarios, compare loan offers, and understand how various factors affect your payments. Consider both the monthly payment and total interest when evaluating loans, shop around for the best rates, and borrow only what you truly need and can comfortably afford. By combining this calculator with careful budgeting, comparison shopping, and strategic planning, you'll make borrowing decisions that support your financial goals and set you up for long-term success.