Loan Calculator
Calculate monthly payments and total interest
How Loan Calculations Work & Examples
⚡Quick Examples - Try These Calculations
🔍How it Works
Monthly Payment Formula
Total Interest Calculation
Payment Breakdown
Understanding Your Results
- • Monthly Payment: Fixed amount paid each month
- • Total Interest: Extra amount paid beyond the principal
- • Total Payment: Principal + Interest over loan term
Common Loan Types
- • Mortgages: Typically 15-30 year terms, 3-7% interest
- • Auto Loans: Usually 3-7 year terms, 4-12% interest
- • Personal Loans: Generally 2-7 year terms, 6-36% interest
Tips for Better Loan Terms
- • Improve credit score before applying
- • Consider larger down payments to reduce principal
- • Compare rates from multiple lenders
- • Choose shorter terms to save on total interest
❓ Frequently Asked Questions
How is the monthly payment calculated?
Monthly payment is calculated using the loan amount, interest rate, and loan term. The formula accounts for compound interest: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ-1], where M = monthly payment, P = principal, r = monthly rate, n = number of payments.
What factors affect my loan interest rate?
Interest rates depend on your credit score, down payment amount, debt-to-income ratio, loan term, loan type, and current market conditions. Higher credit scores and larger down payments typically result in lower rates.
Should I choose a shorter or longer loan term?
Shorter terms mean higher monthly payments but less total interest paid. Longer terms offer lower monthly payments but more total interest. Consider your budget, other financial goals, and how long you plan to keep the loan.
What's included in my total monthly payment?
Your total monthly payment may include principal and interest (P&I), property taxes, homeowners insurance, private mortgage insurance (PMI), and HOA fees. This calculator shows only the P&I portion.
How much house can I afford?
Generally, your total monthly housing expenses shouldn't exceed 28% of your gross monthly income. Include property taxes, insurance, and other housing costs when determining affordability.
What's the difference between APR and interest rate?
Interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus additional fees and costs, giving you a more complete picture of the loan's total cost.
When should I refinance my loan?
Consider refinancing when interest rates drop significantly (typically 0.5-1% or more), your credit score improves, you want to change loan terms, or you need to access equity through cash-out refinancing.
How accurate are these calculations?
These calculations provide accurate estimates for principal and interest payments. Actual loan terms may vary based on lender requirements, fees, and market conditions. Always consult with qualified lenders for precise quotes.