Loan Calculator
Calculate your monthly loan payments and see how much interest you'll pay over time.
Common Loan Types
Amortization Schedule
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $495 | $349 | $146 | $24,651 |
| 2 | $495 | $351 | $144 | $24,300 |
| 3 | $495 | $353 | $142 | $23,946 |
| 4 | $495 | $355 | $140 | $23,591 |
| 5 | $495 | $357 | $138 | $23,234 |
| 6 | $495 | $360 | $136 | $22,874 |
| 7 | $495 | $362 | $133 | $22,512 |
| 8 | $495 | $364 | $131 | $22,149 |
| 9 | $495 | $366 | $129 | $21,783 |
| 10 | $495 | $368 | $127 | $21,415 |
| 11 | $495 | $370 | $125 | $21,045 |
| 12 | $495 | $372 | $123 | $20,673 |
What Your Interest Could Buy ๐ฐ
Your $4,702 in interest could have bought:
The First Year Truth โ ๏ธ
In your first year, here's where your payments actually go:
Biweekly Payment Strategy ๐
Pay half your monthly payment every 2 weeks instead. You'll make 26 half-payments (13 full payments) per year!
Extra Payment Simulator ๐๏ธ
Drag the slider to see how extra payments can save you money:
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How Loans Work
A loan is money you borrow and agree to pay back over time, plus interest. The lender charges interest as the cost of borrowing their money.
Every loan payment has two parts:
- Principal โ pays down what you borrowed
- Interest โ the cost of borrowing
In the early years, most of your payment goes to interest. As time passes, more goes to principal. This is why extra payments early on save the most money!
The Monthly Payment Formula
Where:
- PMT = Monthly payment
- P = Principal (loan amount)
- r = Monthly interest rate (annual rate รท 12)
- n = Total number of payments
Example
$25,000 car loan at 7% for 5 years:
| Metric | Value |
|---|---|
| Monthly Payment | $495 |
| Total Payments | $29,702 |
| Total Interest | $4,702 |
| Interest % of Total | 15.8% |
You pay almost $5,000 extra just for the privilege of borrowing!
Fun Facts ๐
๐ The 30-Year Mortgage Trap
For a $300,000 home at 6.5%:
- 30-year mortgage: $1,896/mo โ Total: $682,633 (paid $382,633 in interest!)
- 15-year mortgage: $2,613/mo โ Total: $470,346 (paid $170,346 in interest!)
The 15-year saves you $212,287 โ more than 2/3 of the house price!
๐ณ The Minimum Payment Trap
$5,000 credit card at 20% APR, paying minimum only:
- Time to pay off: 25+ years
- Total paid: $12,000+
- You paid for the same thing 2.4 times
๐ Car Loans: The Hidden Cost
"0% financing" isn't always the best deal:
- Option A: 0% APR for 5 years
- Option B: $2,000 cash rebate + 5% APR
Sometimes Option B saves you more money!
The Power of Extra Payments
$200,000 mortgage at 6.5% for 30 years:
| Extra Payment | Time Saved | Interest Saved |
|---|---|---|
| $0/month | 0 | $0 |
| $100/month | 5 years | $45,000 |
| $200/month | 8 years | $72,000 |
| $500/month | 14 years | $115,000 |
Even small extra payments add up! Rounding up your payment or making one extra payment per year can shave years off your loan.
Common Loan Types
| Type | Typical Rate | Typical Term | Notes |
|---|---|---|---|
| ๐ณ Personal Loan | 8-15% | 2-7 years | Unsecured, higher rates |
| ๐ Auto Loan | 4-8% | 3-7 years | Car is collateral |
| ๐ Mortgage | 6-8% | 15-30 years | Home is collateral |
| ๐ Student Loan | 4-7% | 10-25 years | Government or private |
| ๐ผ Business Loan | 5-12% | 1-10 years | Varies widely |
Smart Borrowing Tips
1. Shop Around Rates vary by lender. A 1% difference on a mortgage can save tens of thousands.
2. Check Your Credit First Better credit = lower rates. Improve your score before applying.
3. Avoid Long Terms Lower monthly payment โ better deal. You pay WAY more interest over time.
4. Make Extra Payments Even $50/month extra can save thousands and years.
5. Never Finance Depreciating Assets Long-Term A 7-year car loan means you'll owe more than the car is worth for years.
The best loan is the one you don't need. Save up when possible, and if you must borrow, pay it off as fast as you can!