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Loan Payment Calculator

Loan Payment Calculator

Section titled “Loan Payment Calculator”

Calculate your monthly loan payment for any type of loan including personal loans, auto loans, student loans, and mortgages with our free online calculator.

%
yrs
mo

Use Cases

Section titled “Use Cases”

This loan payment calculator is ideal for anyone planning to take out a loan. Students use it for education loans, car buyers for auto financing, homeowners for mortgage planning, and business owners for equipment financing.

What is a Loan Payment?

Section titled “What is a Loan Payment?”

A loan payment is the amount you pay each period (usually monthly) to repay borrowed money plus interest. Each payment includes both principal reduction and interest charges.

How to Calculate Loan Payments

Section titled “How to Calculate Loan Payments”

The monthly payment formula accounts for the loan amount, interest rate, and repayment period:

P=r⋅PV1−(1+r)−nP = \frac{r \cdot PV}{1 - (1 + r)^{-n}}

Where:

  • PP = Payment amount per period
  • PVPV = Loan principal amount
  • rr = Interest rate per period (annual rate ÷ 12 for monthly)
  • nn = Total number of payments

Math.js Expression:

loan_amount = 25000;
annual_rate = 0.05;
monthly_rate = annual_rate / 12;
loan_term_years = 5;
num_payments = loan_term_years * 12;


monthly_payment = (monthly_rate * loan_amount) / (1 - (1 + monthly_rate)^-num_payments);
monthly_payment

Example Calculations

Section titled “Example Calculations”

Personal Loan Example:

  • Loan Amount: $25,000
  • Interest Rate: 5% APR
  • Loan Term: 5 years
  • Monthly Payment: $471.78

Auto Loan Example:

  • Loan Amount: $35,000
  • Interest Rate: 4.5% APR
  • Loan Term: 6 years
  • Monthly Payment: $548.37

Examples

Section titled “Examples”
  • 10,000loanat610,000 loan at 6% for 3 years = 304/month payment
  • 25,000loanat525,000 loan at 5% for 5 years = 472/month payment
  • 35,000loanat4.535,000 loan at 4.5% for 6 years = 548/month payment
  • 50,000loanat750,000 loan at 7% for 7 years = 726/month payment

Common Mistakes & Tips

Section titled “Common Mistakes & Tips”

Forgetting About Other Costs: Your loan payment is just one expense. Budget for insurance, maintenance, and fees that often accompany loans.

Not Comparing Rates: Even a 0.5% rate difference can save hundreds or thousands over the loan term. Shop around before committing.

Choosing Longer Terms for Lower Payments: While longer terms reduce monthly payments, you’ll pay significantly more in total interest.

Ignoring Your Credit Score: Better credit scores qualify for lower rates. Check and improve your score before applying.

Frequently Asked Questions

Section titled “Frequently Asked Questions”

How do I calculate my monthly loan payment?

Section titled “How do I calculate my monthly loan payment?”

Divide your annual interest rate by 12 to get the monthly rate, then use the loan payment formula with your principal amount and total number of monthly payments.

What affects my loan payment amount?

Section titled “What affects my loan payment amount?”

Three main factors: the amount borrowed (principal), the interest rate (APR), and the loan term (length). Higher amounts and rates increase payments; longer terms decrease them.

Can I lower my monthly loan payment?

Section titled “Can I lower my monthly loan payment?”

Yes, by extending the loan term, making a larger down payment, or securing a lower interest rate through better credit or shopping lenders.

Is this calculator accurate for all loan types?

Section titled “Is this calculator accurate for all loan types?”

Yes, this works for any fixed-rate amortized loan including personal, auto, student, and home loans. It doesn’t apply to credit cards or interest-only loans.

Should I make extra payments on my loan?

Section titled “Should I make extra payments on my loan?”

Extra payments reduce principal, shorten your loan term, and save on interest. Even small additional payments can make a significant difference.

What’s the difference between interest rate and APR?

Section titled “What’s the difference between interest rate and APR?”

Interest rate is the cost of borrowing. APR includes the interest rate plus fees and closing costs, giving you the true cost of the loan.

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