Payment Calculator

Payment Calculator

Are you looking for a loan or simply trying to understand your options? Our Simple Loan Calculator makes it easy for you to understand your monthly payments, as well as the true cost of a loan over its lifetime. Change the inputs to find loans that work for you.

Assumptions & Limitations

This calculator is useful for most types of loans that are typically offered by banks and lenders. It is specifically designed for loans that are repaid in a fixed number of equal monthly payments, which applies to most personal loans, auto loans and mortgages. However, some loans are repaid on weekly or bi-weekly schedules, while you may encounter loans that require a large lump sum to be repaid at the end of the loan period. This calculator is not appropriate for these types of loans. Similarly, this calculator assumes that interest is compounded monthly, which is the norm for most consumer loans in the United States. The calculations will be inaccurate if the compounding period is not monthly- for example, many payday loans compound daily or weekly, which increases the total interest you pay on those loans. Some types of credit have variable interest rates, where the interest rate changes as you repay the debt (e.g. credit cards). This calculator assumes that the interest is fixed at the start of loan, which is typical for most loans.

Calculator Inputs

Whether it's a personal loan or a mortgage, a loan is made up of three key ingredients:

• Loan Amount: Also known as the principal, this is the amount of money that you agree to borrow from the lender. This figure could be anywhere from $500 for a small personal loan to tens of millions of dollars for extravagent mortgages.
• Interest Rate:This is the percentage of the loan amount that you will pay as interest to the lender. It is usually an annual rate. Higher interest rates will increase the monthly payment amount, as well as the total cost of the loan. It's important to understand the difference between interest rate and APR, where the latter also incorporates fees (see origination fee below).
• Repayment Period: Also known as the loan term, this is the total time period over which you will repay the loan. The calculator allows it to be specified in years or months (e.g. 66 months or 5.5 years). A small personal loan might have durations as low as 3 months, while mortgages might be repaid over 30 or 40 years.

To calculate your monthly payments, these fields must be filled. The Origination Fee field is optional.

• Origination Fee: Sometimes called an administration fee, this is a chargeimposed by some lenders to cover the cost of providing and processing a loan. The borrower doesn't directly pay the origination fee, but instead the fee is automatically deducted from the loan proceeds. It is usually expressed as a percetange of the total amount borrowed, though you sometimes see it quoted as a fixed amount. The calculator allows you to choose between these two options.

Payment Summary

Once you've completed the required fields and hit the Calculate Payment button, some information will appear, summarizing the payments associated with this loan:

• Monthly Payment: This is the fixed monthly payment amount that was determined at the outset of loan.
• Total Interest: The total amount of interest paid over the lifetime of the loan.
• Total Fees:The total amount of originations fees paid. This caclulator doesn't consider other types of fees e.g. missed payment fees or application fees.
• Total Interest + Fees: The total amount of interest and fees paid over the lifetime of the loan. It is the sum of the Total Interest and Total Fees fields.
• Total Amount Paid:The total amount of money that you will pay to clear the debt. To arrive at this figure, you add the Total Interest & Fees field to the loan amount.

Amortization Schedule

The amortization schedule is a detailed table showing each payment's breakdown into principal and interest components throughout the loan period. Note that origination fees do not directly impact amortization, as these fees are typically paid upfront on receipt of the funds.

• Payment: This is the fixed monthly payment amount that was determined at the outset of loan.
• Principal: The portion of each payment that goes towards reducing the loan amount.
• Interest: The portion of each payment that goes towards the cost of borrowing the money.
• Balance:The amount still owed following that month's principal payment. It can be calculated by subtracting the current's month Principal from last month's Balance.

As you make payments, the amount allocated towards interest decreases, while the portion going towards principal increases. This process is known as amortization.