How to use the Loan Calculator tool
- Choose what to calculate“My payment” finds the repayment for a loan amount. “How much I can borrow” works backwards from a payment you can afford.
- Enter the loan detailsType the amount (or affordable payment), the yearly interest rate and the term in years.
- Pick the payment frequencyMonthly, every two weeks or weekly.
- Try an extra paymentAdd an optional extra amount per payment to see the interest saved and how much sooner the loan is paid off.
What this loan calculator does
- Payment per periodAccurate repayment for car loans, personal loans, student loans and mortgages with a fixed rate.
- Borrowing powerTurn a comfortable monthly budget into the loan amount it supports.
- Extra paymentsSee exactly how much interest and time extra payments save.
- Flexible schedulesCompare monthly, biweekly and weekly payment plans.
- Any currencyWorks with dollars, euros, pounds, rupees or any other currency.
How loan payments are calculated
Most personal, car and fixed-rate home loans are amortizing loans: you pay the same amount every period, and each payment covers the interest due plus part of the balance. The payment is calculated with this formula:
Payment = P × r ÷ (1 − (1 + r)−n)
where P is the loan amount, r is the interest rate per period (yearly rate ÷ number of payments per year) and n is the total number of payments.
Example: a 20,000 loan at 7.5% a year over 5 years, paid monthly, costs 400.76 per month. Over 60 payments you pay about 4,045.54 in interest.
How much can I borrow?
Lenders usually look at what you can afford each month. Reversing the formula turns that budget into a loan amount: P = Payment × (1 − (1 + r)−n) ÷ r. With a budget of 500 a month at 7.5% over 5 years, you could borrow about 24,952.65. Remember to leave room in your budget for insurance, fees and unexpected costs.
The power of extra payments
Any amount you pay above the required payment goes straight to reducing the balance. Because future interest is charged on a smaller balance, extra payments save interest and shorten the loan. In the example above, paying an extra 100 per month clears the loan in 47 months instead of 60 and saves about 964.55 in interest.
Before making extra payments, check that your lender applies them to the principal and doesn’t charge a prepayment penalty.
Monthly vs biweekly payments
Paying half your monthly payment every two weeks results in 26 half-payments a year, the equivalent of 13 monthly payments instead of 12. That extra payment each year reduces the balance faster. In this calculator, choose “Every two weeks” and enter the loan details to see the per-payment amount for a true biweekly schedule.
Things this calculator doesn’t include
- Origination, processing or arrangement fees
- Insurance, taxes or other costs bundled into some loan payments
- Variable or adjustable interest rates
Compare offers using the APR (annual percentage rate), which includes most fees, and confirm final figures with your lender. This tool is for planning purposes and is not financial advice. For a full month-by-month schedule, try our EMI Calculator.