Calculator Suite

Loan Calculator

Calculate monthly payments, total interest, and amortization schedules

Loan Details

Enter your loan information to calculate payments and total costs

Common Loan Terms

15 years20 years25 years30 years

Common Interest Rates

3.5%4.0%4.5%5.0%5.5%6.0%

Loan Formulas & Mathematics

Understand the math behind your monthly payments

Monthly Payment Formula (Amortization)

M = P \frac{r(1+r)^n}{(1+r)^n - 1}

$M$ = Total monthly payment

$P$ = Principal loan amount

$r$ = Monthly interest rate (Annual Rate ÷ 12)

$n$ = Total number of months (Loan Term × 12)

Total Interest Calculation

I_{total} = (M \times n) - P

Total cost of borrowing over the life of the loan.

Remaining Balance

B = P \frac{(1+r)^n - (1+r)^p}{(1+r)^n - 1}

Balance ( $B$ ) after $p$ payments.

Understanding Loans: Comprehensive Guide

TL;DR: This calculator helps you see the true cost of borrowing. It breaks down your monthly payment into principal and interest, showing you exactly where your money goes. Use it to compare terms and see how much extra payments can save you.

Real-World Example: The Cost of a $300k Loan

Let's look at the numbers for a typical scenario:

Loan Amount: $300,000
Interest Rate: 6.5%
Term: 30 Years

The Results:

Monthly Payment: $1,896 (Principal & Interest only)
Total Interest Paid: $382,633 (More than the original loan value!)
Total Cost: $682,633

💡 The Power of Extra Payments

If you pay just $100 extra per month toward the principal, you would save over $46,000 in interest and pay off the loan 3 years and 8 months early.

3 Key Checks Using This Calculator

Before committing to a loan, check these three critical numbers:

Payment-to-Income Ratio: A common guideline is that your debt payments should not exceed 36% of your gross monthly income. Does the calculated payment fit comfortably within this limit?
Total Interest Cost: Look at the "Total Interest" figure. On long-term loans, this can often exceed the principal amount. Can you accept paying double the sticker price for the asset?
Break-Even Point: If comparing a lower rate with high upfront fees (points) vs. a higher rate with no fees, calculate how many months it takes for the monthly savings to recover the upfront cost.

Assumptions & Limitations

To use this tool effectively, please note the following:

What is Calculated:

Fixed-rate amortization schedule
Principal and Interest (P&I) payments
Impact of consistent extra monthly payments

what is NOT Included:

Variable/Adjustable rates
Escrow items (Property Taxes, Insurance, HOA fees)
Closing costs, origination fees, or PMI

Amortization Explained

Source: Khan Academy

Introduction to Mortgage Loans

Source: Khan Academy

Frequently Asked Questions

Should I pay extra or invest the money?

This is a classic financial debate. Paying extra is a guaranteed return equal to your loan interest rate (e.g., 6.5%). If you can invest that money and earn a higher after-tax return (e.g., 8-10% in the market), investing might be mathematically better, but paying off debt offers psychological freedom and zero risk.

What happens if I refinance?

Refinancing replaces your current loan with a new one, usually with a lower interest rate or different term. You can use this calculator to simulate the new loan. Compare the new monthly payment and total interest against your remaining balance and term to see if the detailed savings outweigh the closing costs.

How is the monthly payment calculated?

We use the standard amortization formula $M = P [r(1+r)^n] / [(1+r)^n – 1]$ . This ensures that your payments are equal each month while gradually paying off both interest and principal.

Does this include taxes and insurance?

No, this calculator focuses on Principal and Interest (P&I). For mortgages, you typically need to add property taxes, homeowner's insurance, and potentially PMI (Private Mortgage Insurance) to get your full PITI payment.