How to use the loan calculator
Pick the tab that matches your loan. For an amortized loan, enter the amount, the term, the interest rate, how the rate compounds and how often you pay, and the calculator shows the payment, the total interest and a full schedule. Switch to Find loan amount to start from the payment you can afford instead. The deferred payment and bond tabs work with a single sum paid back at the end.
Three kinds of loans
- Amortized loan: the same payment every period pays the interest and part of the balance, so the loan is paid off by the end. Mortgages, auto, student and personal loans work this way.
- Deferred payment loan: nothing is paid until the end, when the amount borrowed and all the interest are due in one lump sum.
- Bond: the amount to pay back at maturity is set in advance, and the borrower receives less today: the face value discounted by the interest.
Loan payment formula
Each payment first covers the interest for the period, and the rest reduces the balance. The payment is M = P × r ÷ (1 − (1 + r)−n), where P is the amount borrowed, r is the rate per payment period and n is the number of payments. With monthly compounding and monthly payments, r is the yearly rate ÷ 12. When the compounding and the payments differ, the calculator first converts the yearly rate into the rate for one payment period: r = (1 + rate ÷ k)k ÷ f − 1, with k compounding periods and f payments a year.
Loan calculator example
Borrowing $100,000.00 for 10 years at 6% compounded monthly gives 120 monthly payments of $1,110.21. Over the term you pay $133,224.60, of which $33,224.60 is interest, or 33.2% of the amount borrowed. Turned around, a budget of $1,000.00 a month on the same terms lets you borrow $90,073.45.
Payment and interest by loan term
| Term | Monthly payment | Total interest |
|---|---|---|
| 3 years | $3,042.19 | $9,518.97 |
| 5 years | $1,933.28 | $15,996.81 |
| 7 years | $1,460.86 | $22,711.86 |
| 10 years | $1,110.21 | $33,224.60 |
| 15 years | $843.86 | $51,894.23 |
| 20 years | $716.43 | $71,943.45 |
For $100,000.00 at 6%. Stretching the loan from 3 to 20 years cuts the payment from $3,042.19 to $716.43, but the interest grows from $9,518.97 to $71,943.45. Pick the shortest term whose payment still fits comfortably in your budget.
Paying monthly, every 2 weeks or weekly
| Pay back | Payment | Payments | Total interest |
|---|---|---|---|
| Every month | $1,110.21 | 120 | $33,224.60 |
| Every 2 weeks | $511.71 | 260 | $33,045.72 |
| Every week | $255.71 | 520 | $32,969.15 |
The same loan over the same 10 years, with the rate compounded monthly. More frequent payments reduce the balance a little sooner, so the interest is slightly lower; the large savings of a biweekly plan come from paying more in total each year, which the mortgage payoff calculator shows.
Deferred payment loan and bond example
A deferred loan grows with compound interest until it is due: FV = P × (1 + r)n. Borrowing $100,000.00 at 6% compounded yearly means paying back $179,084.77 after 10 years. A bond works the other way, PV = FV ÷ (1 + r)n: to pay back $100,000.00 in 10 years at 6%, the borrower receives $55,839.48 today. For coupon bonds, prices and yields, use the bond calculator.
Loan formulas in Excel
- Payment:
=PMT(6%/12,120,-100000)returns $1,110.21. - Loan amount from a payment:
=PV(6%/12,120,-1000)returns $90,073.45. - Deferred payment due:
=FV(6%,10,0,-100000)returns $179,084.77. - Bond amount received:
=PV(6%,10,0,-100000)returns $55,839.48.
Tips before you borrow
- Compare the APR, not just the rate. The APR includes origination fees and other charges, and the APR calculator works it out.
- Check your credit score. Rates for personal and auto loans vary a lot with credit.
- Ask about prepayment penalties. Paying extra principal saves interest only if the lender allows it without a fee.
- Borrow only what you need. Every extra dollar borrowed is repaid with interest.
Related calculators
For a home loan with property tax, insurance and PMI, use the mortgage calculator; for a car with sales tax and a trade-in, the auto loan calculator. The payment calculator finds how long a fixed monthly payment takes to clear a loan, and the interest rate calculator finds the rate from a payment you were quoted.