About the Loan Calculator
A loan calculator computes the monthly payment and total interest on an amortized loan given principal, interest rate, and term. The formula is the same as for mortgages, auto loans, student loans, and most installment debt.
Formula
M = P × r(1+r)^n / ((1+r)^n − 1)
- M = Monthly payment
- P = Loan principal
- r = Monthly interest rate
- n = Number of monthly payments
Frequently asked questions
What's the difference between interest rate and APR?
The interest rate is the cost of borrowing expressed as a percentage. APR (annual percentage rate) includes the interest rate plus fees and other costs, giving a truer cost of the loan.
Is a shorter loan term always better?
A shorter term means less total interest but higher monthly payments. Pick a term where you can reliably make the payment with buffer for emergencies.
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