What is a loan calculator?
A loan calculator is an online tool that estimates monthly loan payments, total interest, and the total amount paid based on the loan amount, interest rate, and repayment term.
Loan Calculator
See the monthly payment and lifetime borrowing cost for a fixed-rate installment loan.
Enter your loan details
Provide the amount borrowed, annual percentage rate, and repayment period.
About this calculator
How to use Loan Calculator, plus the formulas and logic behind the results.
Tool description
The Loan Calculator estimates fixed-rate installment loan payments, total interest, and total repayment from the loan amount, annual rate, and term.
How to use
- Enter the loan amount (principal).
- Enter the annual interest rate and loan term in years.
- Select Calculate to see the monthly payment and total cost.
- Compare shorter and longer terms to balance payment size and total interest.
Formulas & reference
M = P × r(1+r)^n / ((1+r)^n − 1)r = annual rate ÷ 12, n = number of monthly paymentsTotal interest = (M × n) − P
Fixed-rate loan basics
- Equal monthly payments
- Interest charged on the balance
- Longer terms lower payments
- Shorter terms usually reduce interest
Calculation logic
Payments are amortized with a constant monthly rate. The term in years is converted to whole months. Fees and insurance are not included in the estimate.
Origination fees, late fees, and optional products are not included.
Loan Calculator FAQ
Common questions about the calculation and how to interpret the estimate.
How does a loan calculator work?
Enter the loan amount, annual interest rate, and repayment period. The calculator uses these values to estimate the regular payment and total cost of the loan.
How do you calculate a monthly loan payment?
For a typical fixed-rate installment loan, the monthly payment can be calculated using the principal, monthly interest rate, and total number of monthly payments. A loan calculator performs this calculation automatically.
What information do I need to use a loan calculator?
Most loan calculators require the loan amount, interest rate, and loan term. Some calculators also allow you to include fees, down payments, taxes, or additional payments.
What is the difference between principal and interest?
Principal is the amount of money originally borrowed. Interest is the cost charged by the lender for borrowing that money. Each loan payment usually includes both principal and interest.
How does the interest rate affect loan payments?
A higher interest rate generally results in higher monthly payments and a higher total interest cost. A lower interest rate can reduce both the monthly payment and the overall cost of borrowing.
How does the loan term affect monthly payments?
A longer loan term usually reduces the monthly payment but increases the total amount of interest paid. A shorter term generally results in higher monthly payments but lower total interest.
Can a loan calculator calculate total interest?
Yes. Most loan calculators can estimate the total interest by comparing the total amount paid over the loan term with the original principal borrowed.
Can I use a loan calculator to compare different loan terms?
Yes. Comparing different loan amounts, interest rates, and repayment periods can help you understand how each option affects monthly payments and total borrowing costs.
What is APR on a loan?
APR, or annual percentage rate, represents the annual cost of borrowing and may include certain fees in addition to the interest rate. It can be useful when comparing loan offers from different lenders.
Can extra payments reduce loan interest?
Making additional payments toward the principal can reduce the outstanding balance faster. This may shorten the repayment period and reduce the total interest paid, depending on the loan terms.
Is a loan calculator's result the exact payment from a lender?
A loan calculator provides an estimate based on the information entered. Actual payments may differ because of lender fees, taxes, insurance, payment schedules, rounding, or other loan-specific terms.