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."
RonApplewood says:
Understanding you don’t want to get into formulas, can you explain a bit more about long period interest?
For example, $300k loan with first payment due 105 days after loan origination date. I was advised to take the $300k*interest rate(2.05%)*105/365 and that would be the amount of interest I need to pay at closing/loan origination.
The calculator gives a different (lower value). What concept am I missing here?
Karl says:
A long period includes one period, plus odd days.
Ron Applewood says:
Yeah I understand that, Karl. How do you go about calculating it?
It is clearly not as simple as I described above. Can you please elaborate so I have a more firm understanding of how you arrive at your value.
Karl says:
In that case, I can’t figure out why you are calculating interest for 105 days. Where are you allowing for the full period? Study the schedules and you should be able to see what I mean if this isn’t clear. As you noted, I can’t really get into the weeds and explain calculations. I work fulltime (not on this site) and if I answer questions beyond what calculator to use and how to use a calculator, I wouldn’t have any time left to develop the site.
Ron Applewood says:
Ahh, I figured out the difference. I was calculating interest for a month that will be covered in the first payment since interest is paid in arrears. My numbers now match yours and I have a better overall understanding.
Karl says:
Great! Glad to hear it. That’s what I meant by "A long period includes one period, plus odd days." 🙂
Jake says:
Hello?
Is there any way to translate from English to Japanese?
Karl says:
Are you asking if I can translate it? I can’t. If you know Japanese and want to do the translation, I’ll host a translated version.
You can contact me via the email address on the contact page.
jake says:
Thank you for your reply.
I would like to translate both
One is for Japanese
The other is for Korean
May I do it?
Karl says:
Yes, let’s give it a try. First, please translate the text adjacent to each input and then I’ll see if I can get the layout created.
Alex says:
Hello,
I don’t really understand how come the accrued interest is paid separately if it should be part of the monthly installments. Please advise!
Karl says:
Are you talking about the accrued interest from an initial long period?
The user has complete control over how this interest is collected (it can even be ignored).
See "Long Period Options?:" on the options tab.
And the text on this page for some details or all about loan amortization for even more information.
If this is not the interest you are asking about, please provide more details.
Christine says:
The number of payments is maxed out at 999. I’m salaried, but I still get paid weekly (which is odd, but awesome), wanted to make some projections as to the impact of paying a 20 year mortgage loan with weekly payments (or 1040 payments) and ran into this limiter.
Thanks.
Karl says:
Yes, I see. The next time I release an update, I’ll test it with a larger maximum number of payments.
There is a way around this though. See this calculator. Scroll down the page and see tutorial #1 which covers calculating an unknown payment amount. YOu’ll still be limited to 999, but what you can do is create 2 payment streams, one after the other of say 520 payments each. The results will be correct as if you set it up with one stream of 1040 weekly payments. Try it out. I think you’ll see what I mean. If not, just ask.
Walter Abadi says:
Hi Karl
2 questions.
trying to replicate a loan calculation from financial institution. I use SOLVE_IT but have not been able.
loan ammount: 11,019
interest rate: 10%
60 monthly payments
originating june/18/2020
first payment july/1/2020
i get 235 for the monthly payment, and playing with options plus or minus $1.00
they give me that payment is 241.72
they told me they use 360 days and calculation is based daily and gave me this formula:
Interest ammount= (balance * ((interest_rate*12)/360/100) * QTY_DAYS)
few days trying to figure this out with no success. your expert advise will be appreciated.
Karl says:
Hi Walter, when you say you are trying to replicate the calculation, do you mean in the calculator or the formula to get the result? If you want to use this calculator and the payment amount the financial institution gave you, then enter their payment amount into the calculator and it will create a schedule for you using their payment amount.
FYI: They payment amount isn’t the critical number. The critical calculation is the interest being charged. Do their calculations agree with yours?
Walter Abadi says:
I spoke to the person; and seems that the method used is ACTUAL 360.
i can see a 365/360 setting but appears is different to actual 360.
your comments would be helpfull. tnx
walter abadi says:
and last payment 219.03
Kathy Heitkemper says:
This calculator has been very helpful. I’ve forgiven a month’s loan payment due to corona virus job loss. Is it possible to account for that in the payment schedule?
Thanks!
Karl says:
Good to hear. This calculator does not support skipped or missed payments. However, this payoff calculator allows a user to make payments on any date and you can skip payments too. Scroll down to the tutorials. The calculator has a lot of other features too. I would read tutorial #1 to get an overview. When you set up a loan, one way to handle a missed payment (there are several ways) is to "Expand" the payments (this should make sense when you see the calculator) and then set the payment in question to 0.0.
Kathy says:
This calculator worked really well. Easy to use tutorial! Thank you!
Karl says:
You’re welcome! Thanks for letting me know.
Walter Abadi says:
interesting Karl. but following on this line. we have agreed with many customers to not pay 3 months and added at the end in 3+ payments; but from words to the amortization table is getting a bit though. can we modify the amortization table with 3 payments to zero and instead 0f 60 months make it 63+? but monthly payment ammount remains the same.. sorry very confusing all this..
Karl says:
I believe I understand. You need to use another calculator on this site. Please see the loan payoff calculator. This calculator allows a user to make any payment on any date for any amount. You can also set any payment to 0.00.
If you try this calculator, scroll down the page and see the tutorials. Look at tutorial #1 for an overview. You can get to the days-per-year options by clicking on "Settings." The "360" settings is "Actual/360." "360" is just a shorthand. At least for the calculators on this site.
Karl says:
I should add that if "Monthly" compounding does not produce the results you expect or need, you should try setting compounding to either "Exact/Simple" or "Daily" to get the interest charges to match what you want. This all depends on how a lender calculates interest for a full period – meaning say June 22 to July 22, assuming monthly payments and no odd days.
Harold says:
Your calculator is amazing and so useful. I have several mortgage loans and have used it to check all kinds of options for refi’s!
I’d like to make a request though. It seems the only editing key that can be used is the backspace. I’d appreciate it if you would allow the other editing keys like Delete, Home, End and arrow keys to be used. It seems once a number is entered you can only delete it with a backspace rather than correct or modify it. It would make it easier to change numbers if all editing keys were enabled.
Thanks again!
Karl says:
Thank you for letting me know how you use this calculator. It’s always nice to know that a calculator is useful for someone.
About the editing, I understand what you are saying. Users made this same sort of comment 12 or so years ago when I added the custom styling code to the numeric entry. But I have not heard this comment for years now.
Here’s the thing, the way all the calculators are designed to work is for the user to navigate from one input to the next using the [shift] and [shift-tab] keys (reverse navigation). If a user does this, when they arrive at an input, the value is selected. What the user should do is simply start typing numbers. This clears the entire input. The thousands separators are then inserted as the user enters values and this visual cue should make numeric data entry less error-prone. Usually, though counter-intuitive, retyping the number is faster than screwing around with edit keys and arrow keys. If you hit the home key, then you would have to type the right arrow key to move the insert point and then backspace perhaps to delete the number and type the number. By the time you did all that, the number could have been reentered.
If I allowed editing, then the auto insertion of the thousand separators would not work. Then users would be wondering what they had entered was 9,000,000 or 900,000 because it would look like this: 9000000? And they would be checking their 0 entries.
Harold says:
I see what you mean now about the calculator paradigm. I do like that you put the commas in the numbers. I always hate it when a spreadsheet, for example, is not decimal aligned, with large numbers and no commas!
Pam says:
Karl,
I want to thank you for this calculator. My husband of 49 years recently passed away. He was a real estate broker for 46 years, who, to me, was a genius. Since he came home with Agent Orange from Vietnam in the early 70’s and they didn’t know what it is, he was partially disabled and could get no life insurance, so he set up mortgages for me to live off of when he died. I am doing that now, but now that interest is so low, everyone is refinancing and I am stuck doing pay offs for my clients. I wasn’t trained by anyone how to do this, he did all of it and didn’t teach me. I KNEW there would be a day……anyway,
I am doing a payoff right now for a client and I don’t understand how to get to the closing date when I don’t know what it will be, interest wise. I know there is a daily amount that I am supposed to put in after the last mortgage payment she paid last month that will include interest. Is there an easy site I can go to that would help me figure out what to put in the spaces above? I have been using the calculator for a while now, but tonight I couldn’t get it to calculate and can’t figure what I did wrong. I did put in the monthly amount instead of letting IT figure it out because she pays more every month and has always paid this amount since she took the mortgage but it won’t let me insert this amount. Am I doing it wrong or has it been changed? Thanks a lot for the use of this calculator. Without it I don’t know where I would be right now. Pam
Karl says:
Hi Pam, I have a calculator on this site that is designed to calculate loan payoff amounts. Please use this loan payoff calculator. You’ll need to spend a few minutes going through the instructions. If you have a question, just ask. Basically what the calculator allows you to do is to enter the payments as made and to save your entries for later use. after the last payment, enter a row with today’s date (or the date the loan is to be paid off). This last row will have an "Unknown" amount and the calculator will solve for that, which is the payoff amount.
Good luck.
Linda says:
I am trying to figure out how to modify the following formula so that the first payment date is included as a factor. This formula seems to assume that the first payment date would be 30 days out. Do you have any suggestions as to how to modify this payment calculation formula to accommodate a shorter or longer first payment date (e.g., 15 days in the future or 45 days in the future)?
payment = (rateperperiod * loanamount) / (1 – (1 + rateperperiod)^-term)
I would appreciate any suggestions.
Karl says:
I don’t believe it can be done. I was never able to do it.
For this calculator, I had to write several hundred lines of code to do the calculation.
That’s why I never get involved with discussing equations. It becomes a bottomless pit and such discussions take away from what little time I have to write code.
Linda says:
Thank you for your quick response.