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Loan Calculator

Planning to buy a house or a car? Estimate your monthly payments and total interest cost in seconds.

$
Monthly Payment
$1,135.58
Principal: $200,000.00
Interest: $208,808.08
Total Cost of Loan:$408,808.08

How to Use This Loan Calculator

Understanding your loan payments before borrowing helps you make informed financial decisions:

  1. Enter the loan amount – The total amount you plan to borrow (principal).
  2. Input the interest rate – The annual percentage rate (APR) offered by your lender.
  3. Select the loan term – How many months or years you'll take to repay.
  4. View your results – See your monthly payment, total interest, and total amount paid.

Experiment with different scenarios to find a payment that fits your budget. Even small changes in interest rate or term length can significantly affect your costs.

Understanding Loan Basics

Every loan has the same fundamental components:

  • Principal: The original amount borrowed. This is the base on which interest is calculated.
  • Interest Rate (APR): The annual cost of borrowing, expressed as a percentage. This is what lenders charge for the service of lending you money.
  • Loan Term: The time period over which you'll repay the loan. Longer terms mean lower monthly payments but more total interest paid.
  • Monthly Payment: The fixed amount you pay each month, consisting of both principal and interest.
  • Amortization: The process of gradually paying off the loan. Early payments are mostly interest; later payments are mostly principal.

Types of Loans

This calculator works for most standard installment loans:

Mortgages (Home Loans)

  • Typical terms: 15, 20, or 30 years
  • Interest rates: Currently 6-8% (varies with market conditions)
  • Secured by the property – lower rates than unsecured loans
  • May require down payment (typically 3-20%)

Auto Loans (Car Loans)

  • Typical terms: 36, 48, 60, or 72 months
  • Interest rates: 5-15% depending on credit score
  • Secured by the vehicle
  • New cars typically get lower rates than used

Personal Loans

  • Typical terms: 12-84 months
  • Interest rates: 6-36% depending on creditworthiness
  • Usually unsecured – no collateral required
  • Can be used for any purpose

Student Loans

  • Federal loans: 5-8% fixed rates
  • Private loans: 3-15% variable or fixed
  • Often have deferred payment options while in school

How Interest Affects Total Cost

The interest rate dramatically impacts how much you pay over the life of a loan. Consider this example for a $30,000 car loan:

  • At 5% for 60 months: Monthly payment $566, Total interest $3,968
  • At 8% for 60 months: Monthly payment $608, Total interest $6,499
  • At 12% for 60 months: Monthly payment $667, Total interest $10,045

A 7% difference in interest rate costs over $6,000 more! This is why improving your credit score before borrowing can save you thousands of dollars.

Frequently Asked Questions

Should I choose a longer or shorter loan term?

Shorter terms have higher monthly payments but cost less overall because you pay less interest. Longer terms have lower monthly payments but cost more total. Choose a term where the monthly payment fits comfortably in your budget while minimizing total interest paid.

What credit score do I need for the best rates?

Generally, scores above 740 qualify for the best rates. Scores of 670-739 get good rates. Below 670, you'll pay higher rates or may need a co-signer. Check your credit report for errors before applying, as corrections can improve your score quickly.

Is it better to make extra payments?

Yes, if your loan allows it without penalties. Extra payments go directly to principal, reducing total interest paid and shortening your loan. Even small additional payments make a big difference over time. Just confirm your lender applies extra payments to principal.

What's the difference between interest rate and APR?

The interest rate is the base cost of borrowing. The APR (Annual Percentage Rate) includes the interest rate plus other fees and costs, giving a more complete picture of the loan's total cost. Compare APRs, not just interest rates, when shopping for loans.

Should I refinance my existing loan?

Refinancing makes sense when you can get a significantly lower interest rate (usually 1%+ lower), you plan to keep the loan long enough to recoup closing costs, or you need to change your loan term. Calculate the break-even point before deciding.

Tips for Getting the Best Loan Terms

Follow these strategies to secure favorable loan terms:

  • Check your credit first: Know your score and fix any errors before applying
  • Shop multiple lenders: Compare at least 3-5 offers. Rate shopping within 14-45 days counts as one inquiry
  • Consider credit unions: They often offer lower rates than traditional banks
  • Make a larger down payment: Reduces the loan amount and may qualify you for better rates
  • Choose the shortest term you can afford: Saves significantly on interest
  • Avoid add-ons: Dealer extras (extended warranties, GAP insurance) are often overpriced
  • Read the fine print: Watch for prepayment penalties, variable rate clauses, and hidden fees
  • Get pre-approved: Know your budget before shopping and negotiate from strength

Disclaimer: This calculator provides estimates for informational purposes. Actual loan terms depend on your credit profile, lender policies, and market conditions. Always review official loan documents before signing.