Loan Calculator
Professional tools for mortgages, car loans, and student debt. Calculate absolute monthly payments and long-term interest costs in real-time.
Enter loan details and click calculate to see results
Deep Dive: The Mechanics of Modern Lending
"Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't, pays it." – Albert Einstein
Principal vs Interest
Understanding how your monthly budget is split between debt service and profit for the bank.
Amortization Logic
Why the first 5 years of a mortgage are almost entirely interest payments.
Hidden Costs
Factoring in APR, origination fees, and credit scores on your bottom line.
Loan Types Comparison
Different loan types have different terms, rates, and purposes. Choose the right loan for your financial situation.
| Loan Type | Typical Term | Typical Rate | Best For |
|---|---|---|---|
| Mortgage (30-year) | 30 years | 6-8% | Home purchase, lower monthly payments |
| Mortgage (15-year) | 15 years | 5-7% | Faster equity building, less total interest |
| Auto Loan | 3-7 years | 4-10% | Vehicle purchase, shorter commitment |
| Student Loan (Federal) | 10-25 years | 4-7% | Education, income-driven repayment options |
| Personal Loan | 2-7 years | 8-36% | Debt consolidation, emergency expenses |
1. Mortgage vs. Personal Loan Formulas
Most institutional loans use the **standard amortization formula**. This ensures that the bank receives their interest "upfront" during the early years of the loan. Our calculator uses this exact institutional logic to give you a penny-perfect estimate of your monthly obligation.
Pro Tip: The Power of Extra Payments
Adding even $100 a month to your principal can shave years off a 30-year mortgage and save you tens of thousands in interest. Use our Mortgage Prepayment Calculator to see exactly how much you can save.
Frequently Asked Questions
Q: What is APR vs Interest Rate?
The Interest Rate is the base cost of borrowing. APR (Annual Percentage Rate) includes additional fees like points and closing costs, providing a more accurate 'real' cost.
Q: How does my credit score affect my loan?
Higher credit scores typically qualify for lower interest rates. A 1% difference in interest on a $300k mortgage can equal $50,000+ in long-term savings.
Q: Can I use this for Student Loans?
Yes. Most federal and private student loans use simple daily interest based on a monthly amortization schedule, which this tool simulates accurately.
Q: What's the difference between fixed and variable rates?
Fixed rates stay the same for the entire loan term. Variable rates fluctuate with market conditions, starting lower but carrying more risk if rates rise.
Q: Should I choose a 15-year or 30-year mortgage?
15-year mortgages have higher monthly payments but lower total interest and faster equity building. 30-year mortgages offer lower monthly payments and more flexibility.
Q: What is an amortization schedule?
A detailed table showing how each monthly payment is split between principal and interest over the life of the loan. Early payments are mostly interest; later payments are mostly principal.