Loan Calculator

Understand your loan before you borrow

Loans are a fundamental financial tool that enable major purchases—homes, cars, education—without requiring immediate full payment. But the cost of borrowing isn't just the principal amount; interest accrues over the loan term, often representing tens of thousands of dollars on a mortgage or car loan. A $300,000 mortgage at 6% interest over 30 years costs nearly $216,000 in interest alone. Most borrowers never see the full cost breakdown. This calculator reveals your true loan cost: monthly payment, total interest paid, and how your payment splits between principal and interest each month through an amortization schedule. Understanding these numbers lets you compare loan offers confidently and plan your finances realistically.

Interest rates vary based on creditworthiness, loan type, market conditions, and lender. Even a 0.5% difference in interest rate can mean thousands of dollars over 30 years. By calculating your expected monthly payment upfront, you can assess affordability, compare lenders fairly, and make informed borrowing decisions. The amortization schedule shows another key insight: in early payments, most of your money goes toward interest, while principal paydown accelerates near the loan's end. Some borrowers use this knowledge to make extra principal payments early, significantly reducing total interest.

How loan payments work

• Principal and interest: Your monthly payment includes both. Early payments are mostly interest; later payments mostly principal. The amortization schedule shows this split month-by-month.
• Interest calculation: Lenders calculate monthly interest as the outstanding balance multiplied by the monthly interest rate (annual rate ÷ 12). As you pay down principal, interest decreases.
• Fixed vs. variable rates: Fixed-rate loans have constant monthly payments (easier budgeting); variable-rate loans fluctuate with market rates (initially cheaper, riskier long-term).
• Loan term affects payment: Longer terms mean smaller monthly payments but more total interest. A 30-year mortgage costs far more than a 15-year one, even at the same rate.
• Extra payments reduce interest: Paying extra toward principal accelerates payoff and cuts total interest significantly. Even small additional payments compound into savings.

Common loan scenarios

• Home mortgages. Typically 15–30 years. A $400,000 mortgage at 6.5% over 30 years costs $926/month; over 15 years, $3,158/month. The 15-year option saves ~$150,000 in interest but requires higher monthly payments.
• Car loans. Usually 3–7 years at 4–8% interest. A $30,000 car loan at 5.5% over 5 years costs $552/month; total paid is $33,120 (interest = $3,120).
• Personal loans. Unsecured loans (6–36% APR depending on creditworthiness). A $10,000 personal loan at 10% over 3 years costs $322/month; total interest is $1,593.
• Student loans. Federal loans (4–8%) and private loans (5–14%+). Repayment terms vary widely. Some federal programs offer income-driven repayment.
• Credit card debt. Technically revolving credit, not installment loans. APRs are typically 15–25%, making them expensive unless paid in full monthly.

Frequently asked questions