The Payment Calculator may calculate a fixed-interest loan's monthly payment or loan length. To compute the monthly payment for a fixed-term loan, select the "Fixed Term" tab. The "Fixed Payments" option can determine the time it will take to pay off a loan with a fixed monthly payment. Please use the Auto Loan Calculator to learn more about or calculate auto payments. Use the Take-Home-Pay Calculator to determine your net compensation after taxes and deductions.

A loan is a contract between a borrower and a lender in which the borrower receives an amount of money (principal) they must repay. Loans are customizable based on a variety of parameters. The variety of available alternatives can be daunting. The term and monthly payment amount are two of the most important aspects to consider, and they are divided by tabs in the calculator above.

Mortgages, vehicle loans, and many other types of loans typically have a time limit for repayment. For mortgages, deciding whether to make periodic monthly payments for 30 years, 15 years, or other terms is critical because the length of a debt obligation might influence a person's long-term financial goals. Examples include:

Choosing a shorter mortgage term because of the uncertainty of long-term job security or preference for a lower interest rate when there is a significant quantity of savings

Choosing a longer mortgage term to time it properly with the release of Social Security retirement payments, which can be utilized to pay off the mortgage.

The Payment Calculator can help you work out the finer points of such factors. It can also compare car financing alternatives ranging from 12 to 96 months. Even though many automobile buyers will be tempted to choose the longest term with the lowest monthly payment, the shortest term usually results in the lowest total spent for the car (interest plus principal). Car buyers could experiment with the factors to determine which term is most appropriate for their budget and situation. For further information or to perform mortgage or vehicle loan calculations, please see the Mortgage Calculator or Vehicle Loan Calculator.

This method aids in calculating the time required to repay a loan and is frequently used to evaluate how quickly a credit card debt can be repaid. This calculator can also predict how quickly a person with extra money can repay their debt at the end of each month. Enter the extra amount into the "Monthly Pay" portion of the calculator.

A calculation may produce a monthly payment that is insufficient to repay the principal and interest on a loan. This signifies that interest will accrue rapidly and that loan payback at the specified "Monthly Pay" will be insufficient. If so, change one of the three inputs until a viable result is obtained. Either the "Loan Amount" should be reduced, the "Monthly Pay" increased, or the "Interest Rate" reduced.

When providing a figure for this input, it is critical to distinguish between interest rate and annual percentage rate (APR). The difference can be hundreds of dollars, especially with major loans like mortgages. The interest rate is the cost of borrowing the loan's principal amount. APR, conversely, is a more comprehensive assessment of a loan's cost, considering broker fees, discount points, closing charges, and administrative fees. In other words, rather than making upfront payments, these additional fees are added to the loan's cost and prorated over its duration. The interest rate equals the APR if no expenses are associated with a loan. For further information or to perform APR or Interest Rate calculations, please see the APR Calculator or Interest Rate Calculator.

Borrowers can enter the interest rate and the APR (if they know them) into the calculator to view the results. Use the interest rate to determine loan details without adding any extra charges. Use APR to calculate the loan's total cost. The advertised APR typically gives more accurate loan information.

Loans typically have two interest rate options: variable (adjustable or floating) or fixed. Most loans have set interest rates, including normally amortized loans such as mortgages, auto, and student loans. Variable loans include:
• Adjustable-rate mortgages.

• Home equity lines of credit (HELOCs).

• Certain personal and student loans.

For more information or to perform calculations on any of these other loans, please see the Mortgage Calculator, Auto Loan Calculator, Student Loan Calculator, or Personal Loan Calculator.

In variable-rate loans, the interest rate may change depending on indices such as inflation or the central bank rate (all of which are typically linked to the economy). The primary index rate set by the United States Federal Reserve, also known as the London Interbank Offered Rate (Libor), is lenders' most prevalent financial index used to calculate variable interest rates.

Because variable loan rates change over time, fluctuations in rates affect routine payment amounts; a rate change in one month affects both the monthly payment due for that month and the total estimated interest owed throughout the life of the loan. Some lenders may impose caps on variable loan rates, which are maximum limits on the interest rate charged regardless of how much the index interest rate fluctuates. Lenders only update interest rates at the borrower's agreed-upon frequency, which is most likely specified in the loan contract. As a result, a change in an indexed interest rate does not necessarily result in an immediate change in the interest rate on a variable loan. Variable rates are generally more beneficial to the borrower when indexed interest rates fall.

Credit card rates can be either fixed or variable. Credit card issuers are not obligated to provide advance notification of an interest rate rise on credit cards with variable interest rates. Borrowers with excellent credit can pay interest rates on variable loans and credit cards. For further information or to make calculations involving credit card repayment, try the Credit Card Calculator or the Credit Cards Payoff Calculator.