Calculator Use
Use this loan calculator for a simple calculation of your monthly payment along with interest paid on the loan.
Create and print a loan amortization schedule.
This calculator assumes interest compounding occurs monthly. For additional compounding options use our Advanced Loan Calculator.
Loan Payment Formula
To find the monthly payment we solve this equation for Payment; where n is number of months, and i is the interest rate per month in decimal form:
\( \text{Payment}=\dfrac{\text{Loan Amount} \times i(1+i)^n}{(1+i)^n-1} \)
Example Loan Payment Calculation
Suppose you take a $20,000 loan for 5 years at 5% annual interest rate.
n = 5 × 12 = 60 months
i = 5% / 100 / 12 = 0.004167 interest rate per month
Then using the formula with these values:
\( \text{Payment}=\dfrac{\text{Amount} \times i(1+i)^n}{(1+i)^n-1} \)
\( =\dfrac{(\$20,000)(0.004167)(1+0.004167)^{60}}{(1+0.004167)^{60}-1} \)
\( =\$377.42 \)
Total Interest Paid on a Loan
Total amount paid with interest is calculated by multiplying the monthly payment by total months. Total interest paid is calculated by subtracting the loan amount from the total amount paid. This calculation is accurate but not exact to the penny since, in reality, some actual payments may vary by a few cents.
$377.42 × 60 months = $22,645.20 total amount paid with interest
$22,645.20 - $20,000.00 = 2,645.20 total interest paid
FAQs
Formula for calculating simple interest
Principal loan amount x interest rate x loan term = interest.
How accurate are loan calculators? ›
Mortgage calculators provide general estimates based on the information you input, such as loan amount, interest rate, and loan term. While they offer a close approximation, keep in mind that actual payments may vary based on factors like taxes, insurance and interest rates.
How do you calculate if I can afford a loan? ›
Using a percentage of your income can help determine how much house you can afford. For example, the 28/36 rule may help you decide how much to spend on a home. The rule states that your mortgage should be no more than 28 percent of your total monthly gross income and no more than 36 percent of your total debt.
What is the formula for calculating loan payments? ›
How to Calculate Monthly Loan Payments
- If your rate is 5.5%, divide 0.055 by 12 to calculate your monthly interest rate. ...
- Calculate the repayment term in months. ...
- Calculate the interest over the life of the loan. ...
- Divide the loan amount by the interest over the life of the loan to calculate your monthly payment.
What is the monthly payment on a $5,000 personal loan?
| Payoff period | APR | Monthly payment |
|---|
| 1 year | 15% | $451 |
| 2 years | 15% | $242 |
| 3 years | 15% | $173 |
| 4 years | 15% | $139 |
3 more rowsThe formula is: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1], where M is the monthly payment, P is the loan amount, i is the interest rate (divided by 12) and n is the number of monthly payments.
What is the best calculator for finance? ›
The CFP Board of Standards requires you to have a calculator with an IRR function and no alphabetic keys. This means your best choices here are the HP 10bII+, the HP 12C, the TI BAII Plus or the TI BAII Plus Professional. Graphing calculators (TI 83 Plus, TI 84 Plus CE) are not acceptable.
What happens if my loan estimate is wrong? ›
If you think your lender has revised your Loan Estimate for a reason that's not valid, call your lender and ask them to explain. You can also submit a complaint to the CFPB. Review when your costs are allowed to change and by how much.
How much house can I afford if I make $70,000 a year? ›
One rule of thumb is that the cost of your home should not exceed three times your income. On a salary of $70k, that would be $210,000. This is only one way to estimate your budget, however, and it assumes that you don't have a lot of other debts.
How much house can I afford if I make $36,000 a year? ›
On a salary of $36,000 per year, you can afford a house priced around $100,000-$110,000 with a monthly payment of just over $1,000. This assumes you have no other debts you're paying off, but also that you haven't been able to save much for a down payment.
Your income will determine the loan amount you are eligible for. Lenders will consider your take-home salary, minus certain common deductions such as gratuity, PF, ESI, etc. The take-home salary will determine the EMI amount you can afford and thus the total loan amount you can borrow.
How much can I borrow based on income? ›
The amount you could borrow is based on your income increased by a multiplier. Lenders traditionally offer an amount between four and five times your income, though in some cases they may offer more or less than this. If you are borrowing with a partner there are a few ways a lender might combine your incomes.
How to find the original loan amount formula? ›
Step 1: Identify the current value, A, the interest rate per time period in decimal form, r, and the number of time periods that have gone by since the loan or investment started, t. Step 2: Substitute these values into the simple interest formula, A = P(1+rt). Step 3: Solve for P, the principal.
How do I calculate the total amount paid on a loan? ›
To find the total amount paid at the end of the number of years you pay back your loan for, you will have to multiply the principal amount borrowed with 1 plus the interest rate. Then, raise that sum to the power of the number of years. The equation looks like this: F = P(1 + i)^N.
What is the formula for personal loan? ›
You can calculate your EMI amount with the help of the mathematical formula given below: EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1] where P, R, and N are the variables. It also means that the EMI value will change every time you change any of the three variables. 'P' stands for the 'Principal Amount'.
What is a simple interest loan formula? ›
How to Calculate Simple Interest? Simple Interest is calculated using the following formula: SI = P × R × T, where P = Principal, R = Rate of Interest, and T = Time period.
How do you calculate a loan? ›
EMI = [P x R x (1+R) ^N]/ [(1+R) ^ (N-1)], where –
- P is the principal amount.
- R is the rate of interest.
- N is the loan tenure.
For example, the interest on a $30,000, 36-month loan at 6% is $2,856.
What is the formula for calculating loan rate? ›
To calculate simple interest on a loan, multiply the principal (P) by the interest rate (R) by the loan term in years (T), then divide the total by 100. To use this formula, make sure you're expressing your interest rate as a percentage, not a decimal (i.e., a rate of 4% would go into the formula as 4, not 0.04).
