Calculate your monthly loan payment, total interest paid, and total cost of the loan.
A loan calculator estimates your monthly payment, total interest, and total repayment amount for any fixed-rate loan based on the amount, interest rate, and term.
A standard loan payment is calculated using an amortization formula that factors in the loan amount (principal), interest rate, and loan term, but the resulting monthly payment isn't the same amount of interest and principal every month - early payments are weighted heavily toward interest, while later payments shift progressively toward principal, even though the total payment amount stays fixed throughout the loan. This is exactly why paying off a loan early saves more in interest the earlier it's done, since more of the balance is still accruing interest in the early years.
Comparing loan offers side by side requires looking beyond just the interest rate - loan term length, origination fees, and whether the rate is fixed or variable all affect the true cost of borrowing, sometimes more than a small difference in the stated interest rate itself.
A shorter loan term means higher monthly payments but significantly less total interest paid over the life of the loan, while a longer term lowers the monthly payment but increases total interest substantially - understanding this tradeoff is often more financially important than chasing a slightly lower interest rate.
Most installment loans use amortized payments, meaning the payment amount stays fixed over the life of the loan, but the split between principal and interest within each payment shifts over time. Early payments are weighted heavily toward interest, with only a small portion reducing the actual balance owed, while later payments flip this ratio, putting more toward principal as the outstanding balance (and therefore the interest charged on it) shrinks. This is why paying off a loan early saves more in interest than the payment schedule alone might suggest — early payments are disproportionately interest, so extra principal payments made early have an outsized effect on total interest paid.
Understanding this amortization structure explains why a homeowner who has been paying a mortgage for 5 years has often built up surprisingly little equity relative to their total payments made, since most of those early payments went toward interest rather than reducing the principal balance.
The advertised interest rate on a loan doesn't include fees, while the Annual Percentage Rate (APR) folds in origination fees, closing costs, and other charges into a single comparable rate, making APR the more accurate figure for comparing loan offers from different lenders. Two loans with identical interest rates but different fee structures can have meaningfully different APRs, and relying on interest rate alone when comparing offers can lead to choosing the more expensive loan overall.
Making additional payments directly toward principal, beyond the required monthly payment, can significantly shorten a loan's term and reduce total interest paid, since the extra amount reduces the balance that future interest is calculated on. Even a relatively small additional monthly payment, sustained consistently over a long-term loan, can shave years off a mortgage or auto loan and save a meaningful amount in total interest over the life of the loan.
No, this calculates principal and interest only. Origination fees or insurance are not included.
Amortization schedules apply interest to the remaining balance first, and since the balance is highest early on, more of each payment goes toward interest in the initial years.
Not necessarily - loan term, fees, and whether the rate is fixed or variable all affect total cost, sometimes more than a small rate difference.
Extra principal payments reduce the balance that future interest is calculated on, which can meaningfully shorten the loan term and reduce total interest paid, especially if made early in the loan.
