Loan Repayment Calculator

Understanding Amortized Loans

An amortized loan is a type of loan where you pay back a fixed amount periodically over a predetermined period. Each payment consists of both principal and interest, with the interest portion decreasing and the principal portion increasing over time.

How Amortized Loans Work

With amortized loans, your monthly payment remains constant throughout the loan term. However, the composition of each payment changes:

  • Early payments: Higher interest, lower principal
  • Later payments: Lower interest, higher principal
  • Final payment: Mostly principal with minimal interest

Types of Amortized Loans

Mortgages

Home loans typically amortized over 15-30 years with fixed monthly payments.

Auto Loans

Car financing usually amortized over 3-7 years with predictable payments.

Personal Loans

Fixed-rate personal loans with terms ranging from 2-7 years.

Student Loans

Education loans often amortized over 10-25 years with fixed payments.

Benefits of Amortized Loans

  • Predictable payments: Same amount every month makes budgeting easier
  • Equity building: Each payment reduces the principal balance
  • Interest savings: Pay less total interest compared to interest-only loans
  • Clear payoff date: Know exactly when the loan will be fully paid

Amortization Formula

Our calculator uses the standard amortization formula to determine your monthly payment:

M = P × [r(1+r)^n] / [(1+r)^n - 1]

Where: M = Monthly Payment, P = Principal Amount, r = Monthly Interest Rate, n = Number of Payments

Frequently Asked Questions

How accurate are the loan calculations?

Our calculator uses the standard amortization formula used by banks and financial institutions. The results are highly accurate for fixed-rate loans with regular monthly payments.

Can I use this for different types of loans?

Yes! This calculator works for mortgages, car loans, personal loans, and any other fixed-rate installment loan with regular monthly payments.

What if my interest rate is 0%?

The calculator handles 0% interest rates perfectly. It will simply divide your loan amount by the number of months to calculate your monthly payment.

Does this include insurance or taxes?

No, this calculator only shows principal and interest payments. For mortgages, you'll need to add property taxes, insurance, and PMI separately to get your total monthly payment.

Can I calculate payments for loan terms in months?

Currently, the calculator accepts loan terms in years only. For monthly terms, simply divide by 12. For example, enter 2.5 for a 30-month loan term.

Built with ❤️ by Frimpong.me

Chat