Loan Calculator

Calculate your monthly payment and total interest for any standard amortizing loan.

Loan Amount ($)

Loan Term (Years)

Interest Rate (%)

Estimated Monthly Payment

$188.71

Total Principal$10,000.00

Total Interest$1,322.74

Total Cost of Loan$11,322.74

A Smarter Way to Understand Loans

At its core, a loan is a straightforward agreement: you receive money today (the principal) and agree to pay it back over time. Understanding exactly how you pay it back is the key to making smart financial decisions. Here are the three main types:

Amortized Loans

The most common type for everyday consumers. You pay back a fixed amount every month until the balance hits zero. Think mortgages, auto loans, and student loans.

Deferred Payment

Common in commercial or short-term lending. Instead of monthly payments, you pay back a single, large lump sum when the loan reaches maturity.

Bonds

A unique structure where you pay back a predetermined face value at maturity. Often used by corporations or governments to raise capital.

Loan Basics for Borrowers

Interest Rate (APR vs. APY): Interest is the cost of borrowing. The Annual Percentage Rate (APR) tells you the true cost, including fees, while APY is what you earn on savings.
Compounding Frequency: The faster interest compounds (e.g., daily vs. monthly), the faster your balance grows. Most consumer loans compound monthly.
Loan Term: The lifespan of your loan. A longer term means lower monthly payments, but you'll pay more in total interest over time.

Secured vs. Unsecured

Secured Loans

Backed by collateral (like your house or car). They generally offer lower rates because the lender takes on less risk.

Unsecured Loans

No collateral required (like credit cards or student loans). Approval relies on your credit history and the 5 C's of Credit: Character, Capacity, Capital, Collateral, and Conditions.