How to use loan calculator

Using a monthly payment calculator is a simple way to explore different loan options and see how they fit into your budget. For instance, if $400 a month feels like too much, you can adjust the variables to find an option that works better. Maybe you’ll look for a lower interest rate, choose a longer repayment period, or even rethink how much you want to borrow.

Here’s a breakdown of what you’ll need to use the calculator and an explanation of some key terms:

Loan Amount: This is the total amount you want to borrow, often called the principal. For loans like a mortgage, you might also need to make a down payment, which is the cash you contribute upfront. The loan amount would then be the purchase price minus your down payment.

Loan Term: This refers to how long you’ll take to repay the loan, usually in months. Shorter terms often mean higher monthly payments but less interest overall. On the other hand, spreading the loan over a longer term can lower your monthly payment, though you’ll pay more in interest by the end.

Interest Rate: Choose Interest rate for which you want to calculate your repayment.

Once you selected the loan amount, term & your desired interest rate into the calculator, it will estimate your monthly repayment amount and total interest to pay. It’ll also show a payment schedule to help you understand how much you’ll pay each month.

Here’s what the results mean:

• Monthly Repayment Amount: The amount you need to pay each month, which covers both the loan principal and the interest.
• Total Interest To Pay: The extra money you’ll pay over the life of the loan, in addition to the amount you borrowed.