Loan Calculator
Calculate monthly loan payments, total interest, and total amount paid. Works for mortgages, auto loans, and personal loans.
What is Loan Calculator?
A loan calculator determines monthly payments, total interest paid, and complete amortization schedules for any type of loan — home, auto, personal, or education. It answers the fundamental borrowing question: how much will this loan actually cost me? By seeing the total interest over the loan's life (often 50-100% of the principal for long-term loans), you can make informed decisions about loan amounts, tenure choices, and whether to make prepayments to reduce total interest costs.
How It Works
Enter the loan principal, annual interest rate, and loan term (months or years). The tool uses the standard loan amortization formula to calculate the fixed monthly EMI. It then generates a complete month-by-month amortization table showing how each payment splits between principal and interest. Early payments are heavily weighted toward interest, gradually shifting toward principal over time. The summary shows total amount paid, total interest cost, and the interest-to-principal ratio.
Common Use Cases
- •Estimating monthly payments before applying for a mortgage, auto loan, or personal loan
- •Comparing loan offers by calculating total cost at different rates and tenures
- •Understanding how much of early payments goes to interest vs actually reducing your debt
- •Calculating the interest savings from making a larger down payment on a home or car
- •Planning prepayment strategy by seeing how extra payments reduce tenure and total interest
- •Budgeting for loan commitments by understanding exact monthly cash outflow requirements
Frequently Asked Questions
How is the monthly payment calculated?▼
Using the standard amortization formula: M = P[r(1+r)^n]/[(1+r)^n-1] where P=principal, r=monthly rate, n=months.
How is a monthly loan payment calculated?▼
Using the amortisation formula M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal, r the monthly rate (annual rate divided by 12) and n the total number of payments. The payment stays level while the split between interest and principal shifts over time.
Why does so little of my early payment reduce the balance?▼
Because interest is charged on the outstanding balance, which is at its highest at the start. On a 25-year mortgage the first payment can be roughly two-thirds interest. The proportion going to principal rises every month, which is why the balance falls slowly at first and quickly at the end.
How much do extra payments save?▼
Considerably, because every extra pound comes off the principal and so removes all the future interest that pound would have generated. On a £250,000 loan at 5% over 25 years, an additional £200 a month typically saves tens of thousands in interest and clears the loan years early. Confirm your lender applies overpayments to principal and check for early repayment charges.
What is the difference between the interest rate and the APR?▼
The interest rate is the cost of borrowing the money. The APR also folds in fees, points and certain charges, so it reflects the total cost and is the fairer basis for comparing offers. A low rate with high fees can carry a worse APR than a higher rate with none.
Should I choose a shorter or longer term?▼
A shorter term means a higher monthly payment but far less total interest, because you are borrowing for less time. A longer term improves monthly affordability at a significant total cost. Run both and decide against your actual cash flow rather than the headline payment alone.
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