Loan Calculator

What this loan calculator does

For most fixed-rate loans, the monthly payment is designed to fully repay the balance over a set term. That payment is determined by three inputs: the principal (loan amount), the interest rate, and the number of monthly payments. Once you know the payment, you can estimate the total cost of borrowing by comparing total payments to the original principal.

This calculator also supports an extra monthly payment. Even small extra payments can reduce total interest because they reduce the balance faster, which lowers future interest charges. If the extra payment is too small to cover interest (rare in normal settings), the calculator prevents unrealistic results by avoiding negative amortization.

Use the results as a planning baseline. Real loans may include fees, prepayment penalties, and variable rates. But the core math for a fixed-rate amortizing loan is consistent and useful for comparing scenarios.

How interest and principal change over time

In an amortizing loan, your monthly payment can stay constant while the composition shifts. Interest is calculated on the remaining balance, so early payments allocate more dollars to interest. As the balance declines, interest declines and more of each payment goes to principal, accelerating payoff.

This is why “total interest” is highly sensitive to both the interest rate and the term. A longer term spreads payments over more months, which can reduce the monthly payment but increase total interest. A shorter term does the opposite: higher payment, lower total interest.

Extra payments: small changes, big impact

Extra payments typically reduce the principal directly. Reducing principal earlier has a compounding benefit: future interest is computed on a smaller balance every month going forward. Over multi-year terms, that can add up to meaningful savings.

When comparing extra-payment scenarios, focus on two outputs: payoff time and total interest. If the loan has no prepayment penalty, the “interest saved” is often the most intuitive way to value paying extra.

Real-world loan considerations

This calculator assumes a fixed rate and a regular payment schedule. In the real world, fees (origination, documentation), timing (first payment date), and rounding conventions can slightly change results. If your loan has a variable rate, your future payment may change when the rate resets.

Still, the fixed-rate model is a strong baseline: it helps you understand the relationship between principal, rate, and term. Use it to compare options across lenders, or to decide whether refinancing or accelerating payments could make sense.

Accuracy notes and limitations

This calculator assumes a standard fixed-rate amortizing loan with monthly payments. It does not include lender fees, taxes, insurance, or any payment schedule variations. If your loan includes an origination fee, you can model its impact by treating it as an additional cost and comparing the effective APR separately.

If you’re considering refinancing, compare the new payment and total interest to your remaining balance and remaining term — not to the original loan. Refinancing can reduce the rate or payment, but fees can offset the savings if you don’t keep the new loan long enough.

For business or complex lending products, always validate with your lender’s amortization schedule. Still, the “shape” of the results here is usually directionally correct and valuable for scenario planning.