Loan Calculator
Calculate payments for any loan.
About the Loan Calculator
Calculate payments for any loan.
Understanding How Loans Work
Taking out a loan is a common way to finance major life expenses, from buying a car to consolidating debt. However, understanding the true cost of borrowing is essential to maintaining financial health. Our Loan Calculator helps you see beyond the monthly payment to understand the total interest you will pay over the life of the loan.
Key Loan Terms Defined
- Principal: The original amount of money you borrow.
- Interest Rate (APR): The cost of borrowing, expressed as a yearly percentage. A lower rate means you pay less over time.
- Loan Term: The amount of time you have to repay the loan. Longer terms lower your monthly payment but increase the total interest paid.
Amortization Explained
Most personal and auto loans are "amortized." This means your monthly payment stays the same, but the portion going toward interest vs. principal changes over time. In the beginning, a large chunk of your payment goes to interest. As you pay down the balance, more of your payment goes toward the principal.
How to Save Money on Your Loan
Even small changes can lead to huge savings:
- Pay Bi-weekly: Making payments every two weeks instead of monthly results in one extra full payment per year, shortening your loan term.
- Round Up: Rounding your payment up to the nearest $50 or $100 reduces your principal faster.
- Refinance: If your credit score improves, look for a new loan with a lower APR to replace your current one.