How to use the Loan Calculator
- Enter the amount you plan to borrow, excluding any down payment already paid.
- Enter the annual rate, term, and payment frequency stated by the lender.
- Use the periodic payment for budgeting and the total interest to compare the cost of different offers.
How the calculation works
Payment = P × [r(1 + r)ⁿ] ÷ [(1 + r)ⁿ − 1]P is the amount borrowed, r is the interest rate per payment period, and n is the total number of payments. When the interest rate is zero, the principal is divided evenly across all payments.
Example calculation
A $20,000 loan at 7.5% repaid monthly over five years has 60 payments. The standard amortization formula produces a payment of about $400.76 and total interest of roughly $4,046.
How to interpret the result
A lower payment can come from a lower rate or a longer term. Extending the term often reduces each payment while increasing the interest paid overall, so compare both figures.
Notes and assumptions
- The rate is fixed and interest compounds at the selected payment frequency.
- Payments are equal and made on schedule.
- Origination charges, late fees, insurance, taxes, and early-payment penalties are excluded.
- Results are estimates and may differ from a lender's schedule.
Loan Calculator questions
Can I calculate a zero-interest loan?
Yes. The calculator divides the principal by the number of payments when the annual rate is zero.
Why is total repayment higher than the loan amount?
The difference is interest charged for borrowing, plus any external fees that a lender may add.
Does paying more frequently always save interest?
Not necessarily. It depends on how the lender accrues interest and applies payments; verify the exact loan terms.