๐ฐ Financial
Loan Calculator
Calculate your monthly loan payment, total amount paid, and total interest for any generic loan amount, interest rate, and term.
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Formula
M = P ร [r(1+r)^n] / [(1+r)^n - 1]M- Monthly payment
P- Principal loan amount
r- Monthly interest rate (annual rate รท 12)
n- Total number of monthly payments
Example
Standard Loan Example
Calculating the payment for a $10,000 loan at 8% for 5 years.
- Identify loan parameters: P = $10,000, Annual Rate = 8%, Term = 5 years.
- Convert to monthly values: r = 0.08 / 12 = 0.00667, n = 5 ร 12 = 60 months.
- Apply the formula: $10,000 ร [0.00667(1+0.00667)^60] / [(1+0.00667)^60 - 1].
- Result: The monthly payment is $202.76, and total interest paid will be $2,165.84.
Frequently Asked Questions
Yes, standard loans use compound interest where the interest is calculated monthly on the remaining principal balance.
A zero-interest loan simply divides the principal by the number of months. The total interest will be $0.
A longer term reduces your monthly payment but increases the total amount of interest you will pay over the life of the loan.
Authoritative References & Standards
- Consumer Guide to Loans and Credit Terms โConsumer Financial Protection Bureau (CFPB)
Federal educational resources on amortization, annual percentage rates (APR), and borrowing costs.