Loan Calculator

About Dates & Calculations

VERY IMPORTANT - You must enter a 0 if you want a value calculated. Some users have been frustrated by this. They want to know why the calculator does not just recalculate a payment if they have changed the loan amount, interest rate, or term.

This is because we want the calculator to be able to create an amortization schedule using whatever parameters you want to use. 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!

About the loan origination date (start date) and first payment due date - This calculator now allows irregular length first periods. That is, the calculator calculates the exact amount of interest due even when the initial period is shorter or longer than the other scheduled periods. This will result in payment amounts as well as interest charges that do not match other calculators. If you want to match other calculators then set the "Loan Date" and "1st Payment Date" 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 "1st Payment Date" should be set to June 15th, that is IF you want a conventional interest calculation. See amortization with dates — first period interest & year-end totals for details about the long and short period interest options.

Of course, you can always leave the dates set as they are when the calculator loads.

Much More Than a Payment Calculator

Since the calculator will solve for multiple unknowns, it can easily be used to answer the following questions:

• How much can I borrow?
• What would my payment be?
• What is the lending rate?
• How long will it take to pay off my loan?
• What date is my loan paid off?
• What is the impact of making extra payments?

Loan Calculator with Extra Payments or Lump Sum Payment

If, for example, your loan payment is $550 a month, but you could afford to pay more, say $625 a month, you could go ahead and pay the lender $625.

Why would you want to do that`?

If you made an additional payment each month, you would be prepaying principal - frequently called making extra payments (though there is nothing "extra" about it because the debtor owes the money). When a borrower prepays loan principal, they save interest charges. Loan interest gets calculated each period on the unpaid balance. The extra payment lowers the balance as of the next interest calculation and for all future interest calculations. The result is, you'll potentially save a lot in interest charges because the interest due gets calculated on a lower balance.

How much interest can I save?

That's what this calculator will tell you.

On the options tab, enter an "Extra Payment Amount."

With this calculator, the extra payments can start on any date and be for any frequency. Perhaps you pay the loan monthly, and you receive regular income that is paid to you quarterly (a stock dividend for example) that you want to use for prepaying principal. The calculator gives you the ability to enter extra payments on a schedule that suits you.

Perhaps you anticipate getting a year-end bonus. The loan calculator will calculate the impact of making a single lump sum extra payment. Just pick a payment date and enter 1 for "number of Extra Pmts."

You'll save even more in interest charges if you make multiple extra payments. You can enter a specific number or if you enter "Unknown" for the "number of extra pmts", the calculator will create a payment schedule, adding the extra payment amount as indicated until the loan is paid-in-full.

Another detail about additional payments. Notice if you make the extra payments on a date other than the scheduled periodic payment date, the layout of the amortization schedule changes. You'll see a few new columns. When making an extra payment, the borrower will want the entire amount used to reduce the principal balance. That is what this calculator will do. The additional columns make this clear by tracking the accrued interest in the interest balance column, and the calculator reduces the principal balance by the extra payment amount. The lender collects the accured interest with the next scheduled payment.

If you are a borrower, you can use this calculator to confirm that the lender is allocating the payments in this manner. I believe this is the only free loan calculator with extra payment support on the web that either allow an extra payment on a different date than the regular loan payment schedule or that correctly applies the prepayment 100% to the principal balance.

Wrapping Up

On a more general note, we have been discussing details about loans, some structured with unusual features, over several decades. At this point, we believe our software calculators can create a schedule for any structured settlement loan that exists. If you have a loan with special requirements, please ask.

Hopefully, you'll find this loan calculator as well as all the financial calculators on this site to be useful tools. Why not take another sip of your favorite beverage and explore for a few minutes? Start by checking out The Reading Room. Here you'll find a half dozen articles, written by professionals, about money.