About the Loan Calculator
This loan calculator works for mortgages, auto loans, personal loans and student loans. It shows your monthly payment and how much interest you pay over the life of the loan, and compares three repayment types side by side, because the same amount and rate can cost very different amounts of interest depending on how the principal is paid back. You can also add an interest-only period at the start of the loan.
How to use
- Enter the loan amount, the annual interest rate and the term in years or months.
- If you pay only interest at the start, enter the interest-only period in months. It counts toward the total term.
- Choose Equal payments (a standard amortizing loan), Equal principal or Interest-only to see the monthly payment and total interest.
- Compare all three types in the table and check the amortization schedule month by month or year by year.
Loan payment formulas
With loan amount P, monthly rate r = annual rate รท 12 and n monthly payments:
| Type | Monthly payment | Notes |
|---|---|---|
| Equal payments (amortizing) | P ร r ร (1+r)โฟ รท ((1+r)โฟ โ 1) | Same payment every month; early payments are mostly interest. Used by most mortgages and car loans. |
| Equal principal | P รท n + remaining balance ร r | Highest payment first, then it falls; least total interest. |
| Interest-only | P ร r, principal repaid at the end | Lowest monthly payment but the most interest, plus a large final (balloon) payment. |
Example: a $300,000 mortgage at 6.5% for 30 years costs $1,896.20 a month and about $382,637 in interest. With equal principal the first payment is $2,458.33 and total interest about $293,314; interest-only costs $1,625 a month and $585,000 in interest.
Why an interest-only period costs more
During an interest-only period you pay no principal, so the balance doesnโt shrink and interest keeps accruing on the full amount. Afterwards, the principal has to be repaid over fewer months, so the payment goes up. In the example above, one interest-only year raises the payment to about $1,917.64 and total interest to about $386,837.
What this calculator doesnโt include
- Property taxes, homeowners insurance, PMI and HOA fees that are often part of a mortgage payment (PITI).
- Origination fees, points and closing costs, which make the APR higher than the note rate.
- Rate changes on adjustable-rate (ARM) loans: the rate is assumed to stay fixed.
- Banks may calculate interest by the actual number of days, so real payments can differ by a few cents.
FAQ
Which is better, equal payments or equal principal?
Equal principal always costs less total interest because the balance falls faster, but the first payments are higher. Equal payments keep your budget predictable, which is why almost all US mortgages use them. Extra principal payments on an amortizing loan get you part of the way to the equal-principal savings.
Can I calculate a 15- or 30-year mortgage?
Yes. Enter 15 or 30 years (180 or 360 months). Terms up to 50 years are supported, and the schedule can be grouped by year.
Does it work for 0% financing?
Yes. Enter 0 as the interest rate and the payment is simply the loan amount divided by the number of months.
How much do I save by paying off part of the loan early?
Enter the balance remaining after the extra payment as the loan amount and the remaining months as the term, then compare the total interest with your current schedule. Check with your lender whether a prepayment penalty applies.