Loan Payment Calculator
Calculate your monthly loan payment, total interest, and view amortization schedule.
The monthly payment for a loan is calculated using this formula:
M = P [ r(1 + r)^n ] / [ (1 + r)^n - 1]Where:
- M = Monthly payment
- P = Principal (loan amount)
- r = Monthly interest rate (annual rate divided by 12 and converted to decimal)
- n = Total number of payments (loan term in years × 12)
- Personal Loans: Unsecured loans for personal expenses, typically with higher interest rates.
- Auto Loans: Secured loans specifically for purchasing vehicles.
- Student Loans: Loans for educational expenses, often with lower interest rates and flexible repayment options.
- Home Equity Loans: Loans secured by the equity in your home.
- Debt Consolidation Loans: Loans used to combine multiple debts into a single payment.
- Compare interest rates from multiple lenders before deciding.
- Consider the total cost of the loan, not just the monthly payment.
- Check for any prepayment penalties if you plan to pay off the loan early.
- Understand the difference between fixed and variable interest rates.
- Maintain a good credit score to qualify for better interest rates.
How to Use This Loan Calculator
Our loan payment calculator helps you estimate your monthly payments and total interest costs for various types of loans. Here's how to use it:
- Enter the loan amount you plan to borrow.
- Set the interest rate offered by your lender.
- Adjust the loan term (the number of years you'll take to repay the loan).
- View your monthly payment and other important figures.
- Click "Show Amortization Schedule" to see how your payments break down over time.
The calculator will instantly update as you change the values, allowing you to compare different loan scenarios.
Understanding Loan Payments
When you make a loan payment, it's split between principal and interest:
- Principal: The amount that goes toward paying off your original loan balance.
- Interest: The cost of borrowing money, calculated as a percentage of your remaining loan balance.
In the early years of your loan, a larger portion of your payment goes toward interest. As you pay down your loan, more of each payment goes toward the principal. This process is called amortization.
Common Loan Types
| Loan Type | Typical Term | Interest Rate Range | Common Uses |
|---|---|---|---|
| Personal Loan | 1-7 years | 5-36% | Debt consolidation, major purchases, emergencies |
| Auto Loan | 3-7 years | 3-10% | Vehicle purchases |
| Student Loan | 10-25 years | 3-13% | Education expenses |
| Home Equity Loan | 5-30 years | 3-12% | Home improvements, major expenses |
| Mortgage | 15-30 years | 3-8% | Home purchases |
Note: Interest rates vary based on credit score, market conditions, and lender policies.
Tips for Reducing Your Loan Costs
- Make a larger down payment to reduce the principal amount.
- Shop around for the best interest rate from different lenders.
- Improve your credit score before applying for a loan.
- Consider a shorter loan term to reduce total interest (though monthly payments will be higher).
- Make extra payments toward the principal when possible.
- Avoid loans with prepayment penalties if you plan to pay off early.
- Refinance if interest rates drop significantly after you take out your loan.