Loan Calculator
What does your loan cost? Compute the monthly payment, total cost, total interest and effective annual rate from loan amount, APR and term — in dollars.
Key facts
- The monthly payment follows from loan amount, APR and term (amortization formula). Example: $20,000 at 7.5% over 60 months → $400.76 a month, total $24,045.60, of which $4,045.60 is interest.
- Because interest compounds monthly, the effective annual rate is above the APR: 7.5% APR is about 7.76% effective without fees. Origination fees push it higher.
- A longer term lowers the payment but costs more interest: $20,000 at 7.5% costs $400.76 per payment over 60 months ($4,045.60 interest); over 72 months the payment is lower but total interest is notably higher.
FAQ
- How is the monthly loan payment calculated?
- With the amortization formula: payment = amount × i × (1+i)^n / ((1+i)^n − 1), where i is the monthly rate (APR ÷ 12) and n the number of months. The payment stays constant; the interest share falls and the principal share rises with each payment.
- What is the difference between APR and effective annual rate?
- The APR is the stated annual rate. The effective annual rate (APY-style) additionally reflects monthly compounding — without fees it is (1 + APR/12)^12 − 1, slightly higher. Origination fees or insurance raise the real cost further.
- Is a longer or shorter term better?
- A shorter term means a higher monthly payment but much less total interest. A longer term lowers the monthly burden but raises total interest. Choose the highest payment you can comfortably sustain.