Loan Calculator

How to Use the Loan Calculator

Our loan calculator helps you understand the costs associated with taking out a loan. By inputting the loan amount, interest rate, and term, you can see your monthly payment and the total interest you'll pay over the life of the loan. This is useful for car loans, personal loans, or any other type of fixed-rate loan.

Understanding Key Loan Terms

• Loan Amount (Principal): This is the total amount of money you are borrowing.
• Interest Rate (APR): The Annual Percentage Rate is the cost of borrowing the money, expressed as a yearly percentage. A lower APR means lower costs.
• Loan Term: The amount of time you have to repay the loan. A shorter term means higher monthly payments but less total interest paid. A longer term results in lower monthly payments but more total interest.

Actionable Tips for Smart Borrowing

• Shop around for rates: Don't just accept the first offer. Compare rates from different lenders like banks, credit unions, and online lenders.
• Improve your credit score: A higher credit score typically qualifies you for lower interest rates, saving you money.
• Avoid borrowing more than you need: Only take out a loan for the amount you absolutely need to avoid unnecessary debt.
• Consider making extra payments: If you can afford it, paying more than the minimum monthly payment can help you pay off the loan faster and save on interest. Check with your lender to ensure there are no prepayment penalties.

The Loan Payment Formula (Amortization)

Loan payments are typically calculated using the amortization formula:

• M = Your total monthly payment
• P = The principal loan amount
• i = Your monthly interest rate, calculated by dividing your annual interest rate by 12
• n = Your total number of payments (loan term in years x 12)