Borrow Money Calculator
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Reviewed by Calculator Editorial Team
Use this borrow money calculator to estimate your monthly loan payments, total interest paid, and loan affordability. Whether you're considering a personal loan, mortgage, or business financing, this tool provides a clear breakdown of your loan terms.
How to Use This Calculator
Enter the loan amount, interest rate, and loan term to calculate your monthly payments. The calculator will show you the total interest paid over the life of the loan and provide a payment breakdown chart.
Important Notes
This calculator provides estimates only. Actual loan terms may vary based on your credit score, lender requirements, and other factors. Always review the loan agreement before signing.
How Loan Calculations Work
Loan payments are calculated using the standard amortization formula for fixed-rate loans. The formula for monthly payment (PMT) is:
Monthly Payment Formula
PMT = P × [r(1 + r)^n] / [(1 + r)^n - 1]
Where:
- P = Principal loan amount
- r = Monthly interest rate (annual rate divided by 12)
- n = Number of payments (loan term in years × 12)
The calculator uses this formula to determine your monthly payment, then calculates the total interest paid by multiplying the monthly payment by the number of payments and subtracting the principal.
| Term | Definition |
|---|---|
| Principal (P) | The amount of money borrowed |
| Interest Rate (r) | The annual percentage rate charged by the lender |
| Loan Term (n) | The length of time to repay the loan in years |
| Monthly Payment (PMT) | The amount paid each month |
| Total Interest | The total amount paid in interest over the life of the loan |
Worked Example
Let's calculate a $200,000 loan at 4.5% annual interest for 30 years:
- Convert annual rate to monthly: 4.5% ÷ 12 = 0.375% or 0.00375 in decimal
- Number of payments: 30 years × 12 = 360 payments
- Plug into formula: PMT = $200,000 × [0.00375(1 + 0.00375)^360] / [(1 + 0.00375)^360 - 1]
- Calculate: PMT ≈ $1,073.64 per month
- Total interest paid: ($1,073.64 × 360) - $200,000 ≈ $192,052.80
This example shows that over 30 years, you would pay approximately $1,073.64 per month with a total interest cost of about $192,052.80.
Frequently Asked Questions
What is the difference between APR and interest rate?
APR (Annual Percentage Rate) includes all fees and costs associated with borrowing, while the interest rate is the actual cost of borrowing. APR is always higher than the interest rate.
How does loan term affect my payments?
A shorter loan term means higher monthly payments but less total interest paid. A longer term results in lower monthly payments but more total interest over time.
Can I pay extra toward my loan?
Yes, paying extra principal reduces the total interest paid and shortens the loan term. The calculator doesn't account for extra payments, so you may want to use it to compare scenarios.