Loan Calculator

Borrowing money is expensive. Like, really expensive. Our Loan Calculator shows you exactly how much that "low monthly payment" is actually costing you in interest so you don't get played by the bank.

What this calculator does

• Monthly Payment: What leaves your bank account every month.
• Total Interest: The "fee" you pay for borrowing the money.
• Payoff Date: When you will finally be free.

The Formula

The amortization formula (it's ugly): $P = \frac{r(PV)}{1 - (1+r)^{-n}}$

• PV: The money you get now.
• r: The interest rate (divided by 12).
• n: The number of months you pay.

Unlike math class, here's what that means

• Principal: Paying back what you borrowed.
• Interest: Paying the bank's profit.
• Early Years: You pay mostly interest.
• Later Years: You pay mostly principal. (The bank makes sure they get paid first).

Example Calculation

Loan: $20,000 Car. Rate: 5% for 60 months (5 years).

1. Monthly Payment: $377.
2. Total Paid: $22,645.
3. Interest Cost: $2,645. (That's the price of the loan).

Did You Know? 💡

• "Mortgage": Means "Dead Pledge" in Old French. Either the loan dies when you pay it, or the pledge dies when you... well, you know.
• The 13th Payment: If you make just one extra payment a year on a 30-year mortgage, you can pay it off 4-5 years early and save tens of thousands in interest.
• Credit Score: A low score (620) vs a high score (760) can cost you over $100,000 in extra interest on a house. Fix your credit before you buy!

Expert Insight

The "Monthly Payment" Trap: Car salesmen love to ask, "What payment do you want?" Then they stretch a 3-year loan into a 7-year loan to hit that number. You end up paying double the interest. Always negotiate the Total Price, not the Monthly Payment.

Why this matters

Debt is a tool. Used well (Student Loans for a high-paying degree, Mortgage for a house), it builds wealth. Used poorly (Credit Cards for clothes), it destroys your future. Know the difference.

Frequently Asked Questions

Does checking my rate hurt my credit? Usually no. A "soft pull" gives you an estimate without hurting your score. A "hard pull" (official application) knocks it down a few points temporarily.

Should I pay off my loan early? Yes, unless your interest rate is insanely low (<3%). If your loan is 7% and the stock market earns 7%, paying off the loan is a guaranteed, risk-free 7% return.

What is APR? Annual Percentage Rate. It's the Interest Rate + Fees. Always compare APR, not just the interest rate, to see the true cost.

Related Calculators

• Credit Card Payoff: See how long it takes to escape debt.
• Investment Calculator: See what happens if you invest instead.

Disclaimer: We are not a bank. The numbers are math, not a contract.