How to Use the Loan Calculator
Our calculator helps you estimate your monthly payments for mortgages, auto loans, or personal loans. Follow these simple steps:
- 1. Enter Loan Amount: This is the total amount of money you are borrowing (the principal).
- 2. Enter Annual Interest Rate: Input the yearly interest rate for the loan. For example, enter 5.5 for 5.5%.
- 3. Enter Loan Term: This is the number of years you have to repay the loan (e.g., 30 for a mortgage, 5 for a car loan).
- 4. Calculate: Press the "Calculate" button to see a full breakdown of your payments, total interest, and total cost.
Frequently Asked Questions
What is amortization?
Amortization is the process of paying off a debt over time in regular installments. While your monthly payment stays the same, the portion of it that goes toward interest decreases with each payment, while the portion that goes toward paying down the principal (your loan balance) increases. This calculator uses the standard amortization formula.
Does this calculator include taxes or insurance for mortgages?
No. This calculator shows the principal and interest (P&I) payment only. For a home loan, your actual monthly payment will be higher because it will also include property taxes and homeowner's insurance (often called PITI). You should factor in these additional costs when budgeting for a mortgage.
What is the difference between principal and interest?
The **principal** is the amount of money you borrowed. The **interest** is the cost of borrowing that money, charged by the lender as a percentage of the principal. Your monthly payment is a combination of both. Our results show you the total amount of interest you will pay over the entire life of the loan.