This loan calculator uses a standard formula to help you estimate your monthly payments and total interest for various loan types, such as auto, home, or business loans.
Here is a breakdown of the inputs you need and the formula it uses:
Loan Calculator Inputs
The tool requires three main details to perform the calculation, as seen in the image:
- Loan Amount (P): The total principal amount you intend to borrow.
- Annual Interest Rate (%): The yearly percentage rate charged on the loan.
- Loan Term (Years): The total duration over which you will repay the loan.
How the Calculation Works
The calculator uses the Amortization Formula to determine your fixed monthly payment (M).
M=(1+r)n−1P×r×(1+r)n
- M = Monthly Payment (What you are calculating)
- P = Loan Amount (Principal)
- r = Monthly Interest Rate (The Annual Rate ÷12)
- n = Total Number of Payments (The Loan Term in Years ×12)
Example Calculation
To use the calculator, you would enter specific values. Do you have a scenario you’d like to calculate?
For example, I can calculate your monthly payment if you provide:
- Loan Amount (e.g., $20,000)
- Annual Interest Rate (%) (e.g., 6.5%)
- Loan Term (Years) (e.g., 5 years)