How to Use the Loan Calculator
Calculating a loan payment amount with this calculator is very easy.
- Click clear and enter values for:
- Loan Amount
- Number of Payments (term)
- Annual Interest Rate
- Optionally set the dates.
- Leave Loan Payment Amount set to 0.
- Click either "Calc" or "Payment Schedule."
You can leave the other dozen or so options untouched unless you have a specific reason for changing them.
Info...
Always enter (and reenter) a 0 for the unknown value.
Note - You must enter a zero if you want a value calculated.
Why not design the calculator to recalculate the last unknown?
Because we want the calculator to be able to create a payment schedule using the loan terms you need. This behavior is a feature! After all, there is no such thing as a "correct" loan payment. The payment amount is correct as long as both the lender and debtor agree to it! (If the calculator always recalculated the last unknown, then this feature would not be possible.)
About the loan origination date (start date) and first payment date.
Important - The first loan payment period is seldom equal to the frequency of other schedule payments. That is, if a loan's payment schedule is monthly, the time from when the loan originates (when the borrower receives the money) until the day the first payment is due will likely not equal one month. The first period will typically be either longer or short than a month.
A longer or shorter first period impacts the interest calculation.
Very few (if any?) online calculators can correctly handle this detail. But if you want accurate interest and payment calculations, you need to be able to independently set the loan origination date and the first payment due date. You can do that on the "Options" tab of this calculator.
Warning - Selecting dates will result in payment amounts as well as interest charges that do not match other calculators.
That's the point!
If you want to match other calculators, then set the "Loan Date" and "First Payment Due" so that the time between them equals one full period as set in "Payment Frequency." Example: If the "Loan Date" is May 15th and the "Payment Frequency" is "Monthly," then the "First Payment Due" should be set to June 15th, that is IF you want a conventional interest calculation.
See "Long Period Options" and "Short Period Options" below for additional details about payment amounts and interest calculations.
Yet keeping it simple - if you only need estimates and not absolute accuracy, you can always leave the dates set as they are when the calculator loads.
Much More Than a Payment Calculator
The four values you'll need to set:
- Loan Amount - the principal amount borrowed. It does not include interest.
- Number of Payments (term) - the "Payment Frequency" setting impacts the loan's term. For a loan term of five years, if the payment frequency is monthly, you need to enter 60 for the number of payments. (60 months = 5 years)
- Annual Interest Rate - the nominal interest rate. This the quoted interest rate for the loan. (If the lender is quoting anything other than an annual interest rate, you probably should avoid the loan.)
- Payment Amount - the amount that is due on each payment due date.
Set one of the above to 0 if unknown.
How much can I borrow?
- set the loan amount to "0" (zero)
- enter the number of payments
- enter the annual interest rate, and
- enter the desired or expected payment amount
- calculate
How long will it take to pay a loan off?
- enter the loan amount
- set the number of payments to "0" (zero)
- enter the annual interest rate, and
- enter the desired or expected payment amount
- calculate
What interest rate allows me to pay $350 a month?
- enter the loan amount
- enter the number of payments
- set the annual interest rate to "0" (zero), and
- enter $350 for the payment amount
- calculate.
Three loan options you most likely don't need to touch.
- Payment Frequency - set how often payments are scheduled. The calculator supports 11 options, including biweekly (every other week), monthly, and annually. The schedule calculates payment due dates from the first payment due date.
- Compounding - usually, you should set the compounding frequency to be the same as the payment frequency. Doing so results in simple, periodic interest. Setting this option to "Exact/Simple" results in simple, exact day interest.
- Amortization Method - leave this setting set to "normal" unless you have a specific reason for setting it otherwise. For a complete explanation of these options, see Nine Loan Amortization Methods.
Results - your loan summary
See the payment schedule for total interest saved.
- Total Interest - assuming the debtor makes the payments as scheduled, this is the interest they will pay over the term of the loan.
- Total Prepaid Principal - this is the total of any extra payments. Note, the total interest saved is reported on the payment schedule.
- Total Principal & Interest - the loan amount plus the total interest paid. Thus the total amount you'll pay for the loan.
Eleven loan options you may want to tweak.
- Loan Date - the date the money is available. If the loan is for a vehicle or home, it is the loan's closing date.
- First Payment Due - for leases, it may be the same as the loan date. See "About the loan origination date (start date) and first payment date" above.
- Extra Payment Amount - want to make a single extra payment or series of additional payments? Enter the amount here.
- Extra Payments Start - enter the date you want extra payments to start. The date does not have to align with payment due dates. If you pay a loan monthly and payments are due on the first, you may want to make extra payments on the 15th to align with your pay periods.
- Extra Payment Frequency - set how frequently you'll make additional payments. Want to make extra payments annually when you receive a year-end bonus? This calculator will accommodate such a plan.
- Number of Extra Pmts - enter one or any integer value. If you want to make the extra payments until you pay off the loan, enter "U" for "Unknown."
- Days Per Year - 360/365 days per year option. This setting impacts interest calculations when you set compounding frequency to a day based frequency (daily, exact/simple or continuous) or when there are odd days caused by an initial irregular length period.
- Rounding Options - due to payment and interest rounding each pay period (for example, payment or interest might calculate to 345.0457, but a schedule will round the value to 345.05), almost all loan schedules need a final rounding adjustment to bring the balance to "0". A footnote on the payment schedule informs you of the rounding amount.
- Long Period Options (odd day interest) - setting for how interest is shown on the schedule when the initial period is longer than the selected payment frequency.
- Short Period Options - setting for how payments get adjusted when the initial period is shorter than the selected payment frequency.
- Fiscal Year-End - this setting establishes after what month the calculator shows year-end and running totals. This option is to accommodate businesses with fiscal year ends that do not coincide with the calendar year-end.
More details about the settings for odd day and irregular period interest.
Wrapping Up
Loan Calculator Help...
This calculator will solve for any one of four possible unknowns: "Amount of Loan", "Total Scheduled Periods" (term), "Annual Interest Rate" or the "Periodic Payment".
Enter a '0' (zero) for one unknown value.
The term (duration) of the loan is a function of the "Total Scheduled Periods" and the "Payment Frequency". If the loan is calling for monthly payments and the term is four years, then enter 48 for the "Total Scheduled Periods". If the payments are made quarterly and the term is ten years, then enter 40 for the "Total Scheduled Periods".
The "Amortization Method" should be set to "Normal" (level payments) unless you have a specific reason to set it to another method. &Fixed Principal" causes the amount allocated to principal to be the same each period which result in decreasing payments.
If the terms of the loan call for a 0% interest rate, then the "Amortization Method" must be set to "No Interest," otherwise entering a zero for "Annual Interest Rate?" will cause the calculator to calculate an interest rate. Selecting "No Interest," also lets the user set the payment amount to "0" to tell the calculator to calculate it.
When the first period, the period of time between the "loan date" and the "first payment date" is longer than one full period, there will be interest due for the "extra days". This is known as "odd day interest." Example: if the "loan date" is March 24 and the "first payment date" is May 1, then there are 8 odd days of interest - March 24th to April 1st. How the odd day interest is calculated and collected is controlled with the "Long Period Options." By default, the odd days interest is shown being paid on the loan date.
Conversely, if the time between the "loan date" and "first payment date" is less than the payment period set, then the first period is said to be a "short initial period" and the first payment will be reduced due to less interest being owed. How the payment amount and interest is calculated for a short period is determined by the "Short Period Options."
Confused says:
Worked for Amortization with regular Extra Payments. Many thanks to you, Karl.
Dawn Akers says:
I need to do an amoritization schedule with interst figured monthly not annually, how do I do that?
Thanks,
D
Karl says:
This loan calculator will calculate monthly interest. However, I think what you may mean is, you want to use a monthly interest rate, that it won’t allow.
The lending industry’s convention is to use a nominal annual interest rate. If you know only an effect monthly rate you can convert it to an annual rate. Excel will do the calculation. SolveIT! ($69.95 – link above) has a rate conversion calculator.
Justin says:
I have a loan with Actual/Actual. Is there a way to get this schedule using the calculator?
Karl says:
Yes.
Set "Compounding" to either "Daily" or "Exact/Simple," depending on your needs. And set the "Days Per Year" option to 366.
The calculator will then calculate interest based on the exact number of days, either with or without compounding, and the daily rate will be based on 365 or 366 days per years, whichever is appropriate.
Marlene Barras says:
how to get payment schedule after loan info calculated
Karl says:
Click on the "Payment Schedule" button, and then either fill in the details for the title page if you want one, or click "Skip Title Page."
John Anderson says:
I will like to apply for a personal loan to take care of some debts
Milan Conner says:
I would like to track random additional loan payments in order to verify and confirm current pay out amount reported by loaning institution.
Karl says:
In that case, use the Ultimate Financial Calculator.
There’s a link just above the calculator to these tutorials. Tutorial #1 is an overview, and tutorial #25 is about tracking loan payments made on any date and validating balances.
Rob says:
Hi Karl,
Firstly, this website is wonderful!
I am trying to download an amortization schedule into excel, but it’s downloading as an xml file. When I convert the xml file to a newer excel version, I am only seeing the terms for the loan not the full schedule I am hoping to see. Any thoughts??
Thanks in advance!
Karl says:
Thank you!
The XML file is so that users can save their inputs and later load them back into the calculator or send them to someone else so that they can see the same calculation.
At this time, there is no way to easily send the results to Excel (I’m redoing the site so that hopefully by the end of the year some of the calculators will have an Excel export.)
However, if you use this amortization schedule, you might be able to select the contents of the schedule that the calculator generates below the input area and if so, then you might be able to copy/paste to Excel. I’m hedging my bets because a lot depends on the browser and version of Excel.
donna says:
Hi I need an Amortization Schedule for a loan closing. We have agreed to not start collecting payments on loan for 2 months. I need to accrue for the 2 months and have the amortization schedule show it. please help.
Karl says:
Hello. That should not be a problem. Under "Options," have you tried setting the "Loan Date" and "First Payment Due" with the first payment date being 2 months after the loan date? That should do it. You can control when interest is collected with the Long "Period Options" on the options tab. Let me know if you have a problem.
Paul says:
Hi! I need a calculator that will let me calculate payments for a loan I made to a borrower who can only make two equal pymts a month, but on borrower’s bi-weekly payroll schedule. So, it works out that for the two months in a given year in which a bi-weekly payroll schedule would normally result in 3 pymts, the 3rd pymt would NOT be made (agreement). Twice year, the next pymt borrower could/would make would then be after a 4wk gap, instead of the “normal 2 week gap”.
I would really like to be able to have a schedule that clearly coincides with borrower’s paydays – for my convenience in tracking and posting pymts in receive, as well as borrower’s convenience, but also have payments showing as DUE on the two payroll days the borrower can afford to make payments each month. So, twice a year, there would be a longer period without a pymt being applied to either principal or interest.
I may be missing something in the existing instructions, but have spent a LOT time trying to figure this out and just cannot. Help, please! Thanks! /PD
Karl says:
Hi Paul, what you have is a structured loan.
You should use the Ultimate Financial Calculator. It can create a printable payment schedule with payments for any amount made (or skipped) as of any date.
If you try the calculator, I don’t think you’ll want to use the biweekly payment frequency. Instead, use the twice-monthly payment frequency.
If, after trying it, you don’t get what you need, you may ask any required question at the bottom of that calculator’s page.
Laurie says:
We have a land loan that started July 1, 2020. The terms are 4.5% with quarterly payments for 10 years. From the start we have paid $2500 each quarter. Thus the extra principal amounts vary with each payment. In the future when our auto loan is paid, we expect to apply that to the land loan to further speed up the payoff. Which calculator should I use? Thank you.
Karl says:
If you want to calculate a loan balance (with or without extra payments), I suggest using this loan payoff calculator. The calculator will let you record your payments for any amount on any date. You can save your entries so that you can come back and add payments later too.