Loan calculator
An estimate using a standard amortising loan at a fixed rate. Origination fees, insurance and any early-repayment charge are not included, and a lender quote may differ.
A fixed-rate loan payment is the amount borrowed multiplied by the monthly rate, divided by one minus one plus that rate raised to minus the number of payments — P × r ÷ (1 − (1+r)⁻ⁿ). Borrowing $25,000 over 60 months at 7.5% gives a payment of $500.95, and $5,056.92 of interest across the term.
How to use this calculator
The extra-payment row is the one worth playing with. Interest is charged on the outstanding balance, so every additional dollar of principal removes all the future interest that balance would have generated. On the default loan, an extra $100 a month clears it eleven months early and saves $1,013.61 — a fifth of the $5,056.92 the loan would otherwise cost.
Term is the lever lenders lead with
Stretching the same $25,000 from 60 months to 84 drops the payment by about a fifth and adds roughly half again to the interest. On a $20,000 loan the move from 48 months to 72 is sharper still: about a third off the monthly figure, about half again on the total. Lengthening the term is the standard way to make a payment look affordable and the standard way to pay far more for the same thing, so the total-paid row deserves at least as much attention as the monthly one before anything is signed.
The rate, the fees, and the APR that combines them
The annual percentage rate answers a different question: what interest rate, charged with no fees at all, would produce these payments on the money you actually walked away with. Compulsory fees are folded in, which puts APR at or above the nominal rate every time.
The subtlety most people miss is that the answer depends on the term. A $500 arrangement fee on $25,000 at 7.5% is an APR of 9.51% over 24 months, 8.36% over 60 and 8.13% over 84: one fee, one rate, three different figures, because a fixed cost spread across more payments adds less to each of them. Short loans take the heaviest hit from fees, and that also makes two APRs quoted over different terms less like-for-like than they appear. Compare on APR where you intend to run the loan to term, and on the plain rate plus the fees in cash where you expect to clear it early.
Which fees have to be counted inside an APR differs by jurisdiction, so two APRs are only strictly comparable within the same market. Enter the fees you were quoted in cash and the panel returns the APR beside the plain rate; leave that field at zero and the two read identically, which is the point the row is making.
What people use it for
- Budgeting for a loan before applying
- Working out what a monthly payment will be
- Comparing two terms on the same amount
- Checking a quoted monthly figure against the arithmetic
- Seeing what an extra payment each month saves
- Working out how much you can borrow for a payment you can afford
Questions
P × r ÷ (1 − (1+r)⁻ⁿ), where r is the monthly rate and n the number of months. The annual rate divided by twelve gives r.
Yes, once you enter the compulsory fees. The APR row solves for the rate that would produce this payment on the money you actually received, which is what a lender has to quote. With the fee field at zero it reads the same as the nominal rate.
No. The interest rate covers only interest; the annual percentage rate includes compulsory fees expressed as a single yearly rate, so APR is always equal to or higher than the nominal rate.
Yes. A fixed fee spread over a longer term adds less to APR, which is why short loans are hit hardest by fees. A $500 fee on $25,000 at 7.5% is an APR of 9.51% over 24 months, 8.36% over 60 and 8.13% over 84.
Usually, if you keep the loan to term. If you will repay early, a low-fee deal at a slightly higher rate can win instead.
No. Which fees must be included differs by jurisdiction, so APRs are only strictly comparable within the same market.
Yes, substantially. The payment falls but the total interest rises, often by half again over an extra two years.
Not always. A representative rate only has to be offered to 51% of successful applicants, so yours may be higher. Enter the rate you were quoted.
Interest is charged on what you still owe, which is highest at the start. The schedule shows the split shifting month by month.
Some agreements include an early-repayment charge, sometimes up to two months of interest. Check the terms before making extra payments, because it can cancel the saving.
Work backwards: raise the amount until the monthly figure matches your budget. At 7.5% over 60 months, roughly $50 of payment buys about $2,500 of borrowing.
Yes, if the rate is fixed and the payment is level. There is a car-specific version that handles the deposit, trade-in and sales tax.
No. Everything is calculated in your browser, which is why there is no account and nothing saved.