Loan Calculator

What Is a Loan Calculator?

A loan calculator helps you understand the true cost of borrowing money. By entering your loan amount, interest rate, and loan term, you can instantly see your monthly payment, total payment over the life of the loan, and total interest paid.

This information is essential for making informed financial decisions. Whether you are considering a mortgage, car loan, personal loan, or student loan, understanding these numbers helps you budget appropriately and compare different loan options.

Our free loan calculator provides instant results with no signup required, helping you plan your finances with confidence.

How Loan Payments Are Calculated

Most loans use amortization, where each payment covers both interest and principal. The mathematical formula calculates the fixed monthly payment that will pay off the loan by the end of the term.

Early payments go mostly toward interest, while later payments go mostly toward principal. This is why paying extra early in a loan saves more on interest.

The calculation considers three factors: principal amount, annual interest rate, and loan term in years. These combine to determine your monthly payment amount.

Interest compounds monthly, so the annual rate is divided by 12 for calculations. A 6% annual rate means 0.5% monthly interest.

How to Use the Calculator

Using this loan calculator is simple:

1. Adjust the loan amount slider or enter your total borrowed amount. The range covers typical loan sizes from $10,000 to $1,000,000.

2. Set your interest rate using the slider. Rates typically range from 3% to 8% for mortgages and 5% to 15% for personal loans.

3. Choose your loan term in years. Common terms include 15 or 30 years for mortgages and 3 to 7 years for auto loans.

4. View your results immediately: monthly payment, total payment, and total interest.

Adjust any value to see how it affects your payments in real-time.

Understanding Your Results

The calculator shows three key figures:

Monthly Payment is the fixed amount you pay each month for the life of the loan. This is what affects your monthly budget directly.

Total Payment is the total amount you will pay over the entire loan term. This includes both your original loan amount and all interest.

Total Interest is the difference between total payment and loan amount. This represents the true cost of borrowing the money.

For example, a $250,000 loan at 6.5% for 30 years has a monthly payment of about $1,580, total payment of $569,000, and total interest of $319,000.

Tips for Loan Planning

Use these strategies to minimize your loan costs:

Compare different terms: A shorter term means higher monthly payments but significantly less total interest. A 15-year mortgage often saves hundreds of thousands compared to 30 years.

Shop for rates: Even a 0.5% difference in interest rate can save thousands over a loan's lifetime. Get quotes from multiple lenders.

Consider making extra payments: Paying even a small amount extra toward principal each month can shorten your loan term and reduce total interest.

Check your credit score: Better credit scores qualify for lower interest rates. Consider improving your credit before applying for a major loan.