Loan Calculator
Loan Calculator
The Loan Calculator is a versatile financial tool designed to help you compute the periodic payment required to fully amortize a fixed-rate loan. Whether you are evaluating a personal loan, a student loan, a business loan, or any other type of installment loan, this calculator provides the key information you need to understand the true cost of borrowing.
Understanding how loans work is essential for making informed financial decisions. When you take out a loan, you borrow money that must be repaid over time with interest. The periodic payment includes both a portion toward reducing the principal balance and a portion covering interest accrued since your last payment. Over time, the proportion going toward principal increases as the outstanding balance decreases through amortization.
One of the most important features of this calculator is the ability to model extra payments. By making additional principal payments above the required periodic payment, you can pay off your loan faster and save thousands of dollars in interest. The analysis shows exactly how much you can save and how much sooner you can become debt-free.
The standard loan amortization formula is based on the time value of money principles governing all fixed-rate installment loans. The same formula is used by banks and financial institutions for mortgages, auto loans, personal loans, and most other installment lending products.
For more information, see the Personal Loan Calculator.
Enter the loan principal amount. For a mortgage, this would be the purchase price minus your down payment. Enter the annual interest rate as a percentage (APR). Enter the loan term in years. Common terms include 15 or 30 years for mortgages and 3 to 7 years for auto loans.
Select the payment frequency. Monthly payments are most common. Optionally enter an extra monthly payment amount to see how additional payments accelerate your payoff and reduce total interest.
Press Calculate to see your monthly payment, total interest, total cost, and interest as a percentage of total payments. If you entered extra payments, the calculator shows interest saved and the new payoff timeline. For example, a $300,000 mortgage at 6.5 percent for 30 years has a monthly payment of approximately $1,896 and total interest of approximately $382,000.
The periodic payment is calculated using the standard amortization formula:
Where P is the principal, i is the periodic interest rate (annual rate divided by payments per year), and N is the total number of payments.
The remaining balance after k payments:
Total interest over the life of the loan:
For a $300,000 loan at 6.5 percent over 30 years, total interest is approximately $382,000, meaning more than half of total payments go toward interest.
Monthly payments and total interest for different loan amounts and rates on a 30-year fixed-rate mortgage:
| Loan Amount | 5.0% | 6.0% | 6.5% | 7.0% | 8.0% |
|---|---|---|---|---|---|
| $200,000 | $1,074 ($186,512) | $1,199 ($231,677) | $1,264 ($255,129) | $1,330 ($279,018) | $1,467 ($328,287) |
| $300,000 | $1,610 ($279,767) | $1,799 ($347,516) | $1,896 ($382,693) | $1,996 ($418,527) | $2,201 ($492,430) |
| $400,000 | $2,147 ($373,023) | $2,398 ($463,354) | $2,528 ($510,258) | $2,661 ($558,036) | $2,935 ($656,574) |
| $500,000 | $2,684 ($466,279) | $2,998 ($579,193) | $3,161 ($637,822) | $3,326 ($697,545) | $3,669 ($820,716) |
Extra payments on a $300,000 loan at 6.5 percent:
| Extra Payment | Interest Saved | Payoff Reduced By |
|---|---|---|
| $50/month | $27,000 | 3.5 years |
| $100/month | $47,000 | 6.0 years |
| $200/month | $90,000 | 7.0 years |
| $500/month | $185,000 | 14.0 years |
Making extra payments toward principal is one of the most effective ways to save on interest. Even small additional payments made consistently can reduce total interest by tens of thousands of dollars. Specify that extra amounts should be applied to principal.
Consider bi-weekly payment schedules. Making half a monthly payment every two weeks results in 13 full payments per year instead of 12, directly accelerating principal reduction.
Refinancing makes sense when rates drop significantly below your current rate. A general rule is to refinance if you can reduce your rate by at least 1 percent and plan to stay in the home for at least 3 to 5 years.
This calculator assumes a fixed interest rate and level payments. Adjustable-rate loans require recalculation after each rate change. The calculator does not account for origination fees, closing costs, PMI, property taxes, or insurance.
Extra payments may be subject to prepayment penalties on some loans. Always check your loan agreement. The calculator assumes consistent extra payments from the start of the loan. Irregular extra payments will have a different impact.
- How is my monthly payment calculated?
- Using the amortization formula: M = P x [r(1+r)^n] / [(1+r)^n - 1], where P is principal, r is monthly rate, n is total payments.
- What is an amortization schedule?
- It breaks down every payment showing interest vs principal. Early payments are mostly interest. Over time, more goes toward principal.
- Does making extra payments reduce total interest?
- Yes. Extra payments go directly to principal, reducing the balance faster. This saves thousands and shortens the loan term.
- What is the difference between APR and interest rate?
- Interest rate is the cost of principal. APR includes the rate plus fees expressed as a yearly rate, giving a more complete picture.
- How does loan term length affect total cost?
- Shorter term = higher payments but much less total interest. Longer term = lower payments but significantly more interest over the loan life.
- Consumer Financial Protection Bureau. "What Is an Amortization Schedule?" consumerfinance.gov.
- Federal Reserve. "Consumer Handbook on Adjustable-Rate Mortgages." federalreserve.gov.
- Investopedia. "Amortization Schedule Definition." investopedia.com.
- Bankrate. "Amortization Calculator." bankrate.com.
- NerdWallet. "Loan Calculator." nerdwallet.com.
Last updated: May 12, 2026