Loan / Mortgage Calculator

How to Use the Loan Calculator

1. Enter the loan amount - the principal you will actually borrow, net of any down payment. For a $30,000 car with $5,000 down, the loan amount is $25,000, not $30,000.
2. Enter the annual interest rate - the nominal yearly rate the lender quotes. Enter it as a percent (6.5, not 0.065). If your lender quotes an APR that includes fees, use that figure for a more accurate total-cost number.
3. Enter the loan term - toggle between years and months. Typical terms are 360 months (30-year mortgage), 180 months (15-year mortgage), 60-84 months for auto loans, 24-60 months for personal loans, and 120-300 months for federal student loans.
4. Read the three outputs - the monthly payment is the number you would send the lender each month. Total paid is monthly payment times number of payments. Total interest is total paid minus principal; that is the fee you are paying for the loan, independent of what you are buying.

What the Tool Does and the Formula Behind It

This calculator solves the closed-form amortization equation for a fully-amortizing fixed-rate loan: M = P × r(1+r)n / ((1+r)n - 1), where M is the monthly payment, P is principal, r is the periodic interest rate (annual rate divided by 12), and n is the number of payments. The equation is derived from the present-value-of-annuity formula in the Time Value of Money framework - it is the same math used by Bankrate, Zillow, and every loan officer's HP 12C calculator. When the rate is exactly zero, the formula degenerates and the calculator falls back to simple division: P / n.

The computation runs inside a Preact component that recomputes on every keystroke. JavaScript numbers are IEEE-754 doubles, which means the result is accurate to about 15 significant digits - far more precision than any lender's actual billing system, which typically rounds to the nearest cent per payment. Because billing systems round up, your last scheduled payment in real life is usually a few dollars different from the first payment; this calculator shows the ideal mathematical average.

Real Scenarios Where You Would Pull This Up

• Comparing two mortgage offers at different rate-and-fee combinations to see which has the lower total cost over 7 years (the typical home-ownership span).
• Deciding whether to finance a used car at the dealer's 8.9% offer or take a 6.5% personal loan from your credit union.
• Modeling a student-loan refinance: current balance at 6.8% federal versus a private 5.4% offer, net of losing income-driven repayment flexibility.
• Choosing between a 15-year and 30-year mortgage - the 15 saves enormous interest but the 30 gives liquidity that can be invested.
• Sanity-checking a monthly payment a dealer or lender verbally quotes before you sign (a common tactic is to quote a low monthly by stretching the term).
• Estimating what you can afford before a home search by plugging maximum DTI-compliant monthly into the inverse of the formula.

Edge Cases That Trip People Up

First, the loan amount and total purchase price are not the same thing. A mortgage with closing costs rolled in has a higher principal than the sale price; enter the real balance you will owe day one, not the sticker. Second, the rate entered should be nominal annual, not effective. A 6% nominal rate compounded monthly has an effective annual rate of about 6.17% - if your lender quotes the effective figure you will slightly over-calculate the payment. Third, this calculator assumes a fixed rate; adjustable-rate mortgages (ARMs) and variable-rate private student loans change their monthly payment on each reset date. Fourth, "bi-weekly" payment plans are not covered by this tool - they make 26 payments a year instead of 12 and cut total interest by several years. Finally, balloon loans (common for small-business and commercial real estate) do not fully amortize; the closed-form formula here assumes the final payment zeroes the balance.

Amortization, APR, and the Specs That Govern Them

Amortization is the process of gradually paying off principal through level periodic payments. Early in the loan, most of each payment covers interest; late in the loan, most covers principal - the crossover happens roughly two-thirds of the way through for a 30-year mortgage at typical rates. US consumer loans are governed by the Truth in Lending Act (TILA, 15 U.S.C. Chapter 41) and Regulation Z, which require lenders to disclose the APR using a standardized formula that includes finance charges beyond raw interest: origination, discount points, mortgage insurance, and certain third-party fees. APR is always equal to or greater than the nominal rate; a loan with no fees has APR equal to the note rate. This calculator uses the note rate by default because that is what you enter; to see a full APR-based total cost, plug in the APR figure from your lender's TILA disclosure instead.

How This Compares to Excel, a Financial Calculator, or Your Lender's App

Excel and Google Sheets have a PMT(rate, nper, pv) function that returns the same number this calculator produces - the advantage of the spreadsheet is that you can chain it with scenarios for rate sensitivity analysis. An HP 12C or TI BA II Plus financial calculator uses the identical TVM keys (N, I/Y, PV, PMT, FV) and remains the industry standard on the CFA exam and in commercial lending desks. Lender apps and sites like Bankrate often include tax-and-insurance estimates your amortization formula cannot know about; those are more accurate for total monthly housing cost, but slower for quick comparison shopping. This tool's value is speed for a single what-if: three inputs, one answer, no signup. For an apples-to-apples comparison of real lender offers, use the APR figures on the Loan Estimate form (required within three business days of a mortgage application by the TRID rule). This output is informational and should not be used as the sole basis for a borrowing decision - a licensed loan officer or financial advisor should review any significant debt before you sign.