Money Saving Expert Loan Calculator
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Reviewed by Calculator Editorial Team
This loan calculator helps you determine your monthly payments, total interest paid, and how much you'll save by choosing a lower interest rate. Whether you're comparing different loan options or planning your budget, this tool provides clear insights to help you make informed financial decisions.
How the Loan Calculator Works
The loan calculator uses the standard amortization formula to determine your monthly payments and total interest over the life of the loan. The formula accounts for the loan amount, interest rate, and loan term to provide an accurate calculation.
The calculator also provides a breakdown of how much of each payment goes toward principal and interest, helping you understand the cost of your loan over time.
How to Use This Calculator
- Enter the loan amount you're considering
- Input the annual interest rate (APR)
- Specify the loan term in years
- Click "Calculate" to see your results
- Review the monthly payment, total interest, and principal breakdown
- Use the chart to visualize your loan repayment over time
Tip: Try different interest rates to see how they affect your monthly payments and total interest paid. This can help you negotiate better loan terms or find more affordable options.
The Formula Explained
The loan payment formula is derived from the present value of an annuity. It calculates the fixed monthly payment required to fully amortize a loan over its term. The formula accounts for both the principal and interest components of each payment.
The monthly interest rate is calculated by dividing the annual percentage rate by 12. The number of payments is determined by multiplying the loan term in years by 12.
For example, a $200,000 loan at 4% APR over 30 years would have a monthly payment of approximately $1,073.64, with $1,043.64 going toward principal and $30.00 going toward interest in the first month.
Worked Example
Let's calculate a $150,000 loan at 3.5% APR over 15 years:
Your monthly payment would be approximately $1,297.50, with the first month's payment consisting of $1,267.50 toward principal and $30.00 toward interest. Over the 15-year term, you would pay a total of $233,550, with $150,000 going toward the principal and $83,550 in interest.
Loan Comparison Table
Compare different loan options to find the most cost-effective choice for your situation.
| Loan Amount | Interest Rate | Term (Years) | Monthly Payment | Total Interest |
|---|---|---|---|---|
| $100,000 | 4.0% | 10 | $1,073.64 | $37,364.00 |
| $100,000 | 3.5% | 10 | $1,030.33 | $33,033.00 |
| $100,000 | 4.0% | 15 | $779.34 | $52,399.00 |
| $100,000 | 3.5% | 15 | $736.03 | $48,903.00 |
| $100,000 | 4.0% | 30 | $536.82 | $74,045.00 |
| $100,000 | 3.5% | 30 | $493.52 | $64,062.00 |
This comparison shows how different interest rates and loan terms affect your monthly payments and total interest paid. A lower interest rate or longer loan term can significantly reduce your total interest costs.