FinanceReviewed Methodology
Loan Calculator
This loan calculator estimates monthly payments and total loan cost using a standard amortization method.
Quick answer
Monthly payment depends on principal, interest rate, and term.
What this tells you
- •Monthly payment depends on principal, interest rate, and term.
- •Longer terms reduce monthly payment but increase total interest.
- •Use this as a planning estimate before lender-specific fees.
How to Use
- 1Enter loan amount (principal).
- 2Enter annual interest rate.
- 3Enter loan term in years.
- 4Calculate to see monthly payment and total cost.
How It Works
Formula
M = P x [r(1+r)^n] / [(1+r)^n - 1]Standard amortization formula where P is principal, r is monthly rate, and n is total monthly payments.
Calculation note: values are processed in the order shown above, using the current input units.
Worked Examples
5-year loan example
Principal$25,000
Rate6%
Term5 years
ResultMonthly: $483.32
Common mistakes
- Entering annual rate as monthly rate
- Ignoring lender fees and insurance in real-world comparisons
- Choosing term based only on monthly payment
Limitations
This estimate does not include lender-specific fees, taxes, or insurance products that may change final cost.
Frequently Asked Questions
No. It estimates principal-and-interest repayment only.
Payment is principal divided by total months.
Interest accrues over more months.