Loan Amortization Calculator
Make informed financial decisions. Estimate your loan payments, total interest, and the total amount you’ll pay over the life of your loan. Our calculator uses standard fixed-rate loan formulas to give you a clear picture.
How to Use Our Loan Calculator
Using this calculator is straightforward. Follow these simple steps:
- Enter Loan Amount: Input the total principal amount of the loan you are considering (e.g., 200000).
- Enter Annual Interest Rate: Provide the yearly interest rate for the loan without the ‘%’ sign (e.g., 4.5 for 4.5%).
- Enter Loan Term: Specify the duration of the loan in years (e.g., 30 for a 30-year loan).
- Select Payment Frequency: Choose how often payments are made. Currently, “Monthly” is supported for precise calculations.
- Click “Calculate Loan”: Once all fields are filled, press the calculate button to see your results.
- Review Results: The calculator will display your estimated monthly payment, total amount paid, and total interest paid.
- Clear Form: Use the “Clear” button to reset the fields and start a new calculation.
This tool is perfect for understanding potential mortgages, car loans, personal loans, or any other fixed-rate installment loan.
Understanding Loan Amortization
Loan amortization is the process of paying off a debt (like a mortgage or auto loan) with a fixed repayment schedule in regular installments over a set period. Each payment consists of both principal (the original loan amount) and interest.
Initially, a larger portion of your payment goes towards interest. As you continue to make payments, more of each payment is applied to reducing the principal balance. Our calculator helps visualize this by showing your total interest and principal paid.
The monthly payment (M) for a fixed-rate loan is typically calculated using the formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
- P = Principal Loan Amount (the amount you borrowed)
- i = Periodic Interest Rate (Annual Rate / Number of Payments per Year / 100). For monthly payments, this is (Annual Rate / 12 / 100).
- n = Total Number of Payments (Loan Term in Years * Number of Payments per Year). For monthly payments, this is (Loan Term in Years * 12).
This calculator provides a quick and reliable estimate based on these standard calculations, helping you plan for future financial commitments.