Loan Calculator

What a loan calculator tells you

A loan is a simple promise with a complicated price tag. You borrow a lump sum today and repay it in equal monthly instalments, but each instalment quietly contains two very different things: interest, which is the lender’s fee for the money, and principal, which actually shrinks what you owe. This calculator separates the two so you can see the real cost of borrowing before you sign anything.

Enter a loan amount, an annual interest rate and a term, and you instantly get:

• Monthly payment: the fixed amount you’ll pay every month.
• Total interest: everything you pay on top of the amount borrowed.
• Total of payments: principal plus interest over the full term.
• Amortization schedule: a yearly or monthly breakdown of every payment.

How the monthly payment formula works

Fixed-rate loans use the annuity formula. It finds the one constant payment that brings the balance to exactly zero after the final month, given that interest is charged every month on whatever is still owed.

The calculator converts your annual rate into a monthly rate (divide by 12, then by 100) and your term into a number of monthly payments. Each month, interest is calculated as balance × monthly rate; the rest of your payment reduces the balance. Because the balance falls every month, the interest portion falls too, and more of each payment goes toward principal.

Worked example

Say you borrow $25,000 at 7.5% APR for 5 years:

Plugging these in gives a monthly payment of $500.95. Over 60 months you pay $30,057 in total, so the loan costs $5,057 in interest. In the first month, $156.25 of your payment is interest and $344.70 reduces the balance. By the final year almost all of each payment is principal.

How rate and term change the cost

Two levers decide what a loan really costs you:

1. The interest rate. On the example above, dropping the rate from 7.5% to 5.5% cuts total interest by about $1,400. Shopping lenders or improving your credit score before you apply pays off directly.
2. The term. Stretching the same loan to 7 years lowers the monthly payment to about $384, but total interest climbs to roughly $7,200. A longer term buys breathing room each month at the price of a larger total bill.

Use the calculator to compare scenarios side by side: try the same loan at 3, 5 and 7 years and look at the total interest line, not just the monthly figure.

Reading the amortization schedule

Open the schedule under the calculator to see the life of your loan. Switch between yearly totals for a quick overview and monthly rows for detail. Three things to look for:

• The crossover point: the month when principal finally exceeds interest in each payment. On long loans this can take years.
• Remaining balance: useful if you plan to sell a car or refinance partway through.
• Interest per year: in some countries, mortgage interest is tax-deductible, and this column is what you’d report.

You can save the whole breakdown as a PDF with the Save as PDF button. It uses your browser’s print dialog, so nothing is uploaded.

Tips before you borrow

• Compare loans using the APR, which includes most fees, not the headline rate.
• Ask whether there are prepayment penalties. Paying extra early saves the most interest.
• Keep total debt payments comfortably below your monthly income. Many lenders look for a debt-to-income ratio under 36%.
• If you’re saving and borrowing at the same time, compare your loan rate with what your savings earn using our compound interest calculator.