Loan Calculator

How does the loan payment formula work?

For $40,000 at a nominal annual rate of 10% over five years, select Monthly payments and leave Compounding frequency at Same as payment frequency. With no extra payments, the calculator returns $849.88 per month, $10,992.91 total interest, and $50,992.91 total cost. Enter the term as either 5 Years or 60 Months to reproduce this result.

The standard fixed-payment amortization formula is M = P × r / [1 − (1+r)⁻ⁿ]. P is the borrowed principal, r is the rate per payment period, n is the whole number of payments, and M is the regular payment before extras. In this example, P = 40,000, r = 0.10 ÷ 12, and n = 60. At zero interest, the formula becomes M = P ÷ n.

A longer term generally lowers the regular payment while increasing total interest. Compare scenarios by changing only the term and keeping the principal, rate, frequencies, and extra payment plan unchanged.

Schedule calculations retain full precision; displayed money and exported monetary fields use two decimal places. Multiplying a rounded installment by the payment count can differ from the calculated total. Total cost means principal plus calculated interest, with no separate fees.

How do annual and semiannual payments differ from monthly payments?

Payment frequency controls the number of installments per year: Monthly uses 12, Every 2 weeks uses 26, Weekly uses 52, Quarterly uses 4, Twice a year uses 2, and Yearly uses 1. Every two weeks is not the same as twice a month. The term must produce a whole payment count between 1 and 1,200, so some short terms cannot be combined with an annual frequency.

Changing payment frequency produces newly calculated installments rather than monthly payments simply added together. Because the default compounding follows payments, changing frequency also changes the rate convention unless you choose a fixed compounding frequency separately.

To change payment timing while holding compounding constant, open Compounding and extra payment plan and select a fixed Compounding frequency. The default, Same as payment frequency, changes compounding along with the payment selection. Record both settings when comparing a result with a lender's schedule.

How does separate compounding affect the periodic interest rate?

The calculator interprets Annual interest rate as a nominal annual percentage. With c compounds per year and p payments per year, the equivalent payment-period rate is r = (1 + annual percentage ÷ 100 ÷ c)^{c ÷ p} − 1. When c and p are equal, this simplifies to annual percentage ÷ 100 ÷ p.

Different compounding choices can produce different periodic rates even when the nominal annual percentage stays fixed. The interest calculation uses this periodic rate rather than the first payment date or a daily accrual count. For a separate savings scenario, use the Compound Interest Calculator.

What does each amortization row show?

Amortization divides repayment into interest and principal. Each row applies interest to the outstanding balance and allocates the rest of the scheduled payment to principal. As the balance falls, the interest portion falls and more of an unchanged regular payment goes toward principal.

Expand Amortization schedule to inspect payment number, payment amount, principal, interest, and balance. An Extra column appears when extras are actually applied. Rows use payment numbers rather than dates. Download CSV includes the Extra field even when it is zero, with monetary values formatted to two decimal places. Choose First payment date (for payoff estimate) to populate the Payoff date result; this date does not change the payment amount.

How do extra payments shorten the term or lower later payments?

Extra payment per period (optional) adds an amount after every scheduled payment. The expanded plan also supports Recurring extra per period starting at a chosen payment number and one-time amounts added with Add one-time extra payment. These amounts add together when they fall in the same period. An extra payment is capped at the remaining principal so it cannot push the balance below zero.

Under After extra payments, Shorten term (keep regular payment) retains the regular installment and can finish repayment sooner. Lower subsequent payments (keep term) recalculates the next regular installment over the remaining original term after an extra is applied. The summary payment card still shows the original base payment; use the schedule to inspect later installments. Interest saved compares the resulting interest with the same loan without extras.

Can I continue from an existing loan balance?

Select I already have a loan to enter Current balance, Annual interest rate (%), and Current monthly principal and interest payment. Alternatively, select Use remaining term instead of current payment and enter Remaining term (whole months). This mode assumes monthly payments starting next month and reports the remaining payment count, payoff month, and total remaining interest. A current payment that only covers interest is rejected because it does not repay principal.

Both modes model a single fixed rate. There are no separate inputs for origination fees, early repayment charges, property taxes, insurance, or changes in rate. Amounts display as US dollars; the tool does not convert currencies. Use consistent amounts and rate conventions, and compare a mortgage calculation separately when assessing additional home-loan costs.