## 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...

**File save and open are new beta test features.**If you happen to get a different calculated result, do not assume that this calculator is making an error. Most likely, the problem is with the new file load feature. Please check that all settings got loaded as expected.

### 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:

- the principal amount borrowed. It does not include interest.*Loan Amount*- 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)*Number of Payments (term)*- 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.)*Annual Interest Rate*- the amount that is due on each payment due date.*Payment Amount*

**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

*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."

## jennifer hall says:

Do you have an am schedule or the like for when someone is not making the normal payment? We owner financed and the person has not been making the full payment and we need to calculate how much in the arrears they are.

## Karl says:

Yes. What you should try is this loan payoff calculator. It lets users enter payments as they are made, on any date. If you have questions about how it works, you may leave them at the bottom of the page, but the instructions are pretty detailed too.

## Monte Friedman says:

Karl,

Thank you for your reply.

Based upon the following parameters:

Loan Amount: $100,000 Term: 30 years Rate: 4% = $477.42 (Principal & Interest Paid Monthly)

IF we multiply $477.42 X 12 months = $5,729.04 (Principal & Interest Paid Annually)

NEXT: IF we take $5,729.04 and divide it by 52 Weeks: = $110.17 (Principal & Interest Paid Weekly)

What I am attempting to understand is this:

IF the Principal and Interest is applied to the loan every 7th Day, would the Term of the Loan SHORTEN

Even though the Total Dollars Paid over a 365.25 Day (1 Year) Period?

It seems to me that it should because we are reducing Principal on a 7 Day Schedule instead of a Monthly Shedule..

Thank you,

## Monte Friedman says:

Karl,

That should have been,

“Even though the Total Dollars Paid over a 365.25 Day (1 Year) Period are the same.”

## Karl says:

Hi Monte, have you tried the calculator? It will calculate this for you and you should be able to compare the schedules.

That’s a great thing about calculators — they can be used as a teaching tool.

## John Dmochowski says:

We have a small corporation and the stockholders make loans to the company. I would like a program that is on a computer that calculates monthly balances, instead of our paper and pencil method. Does this financial calculator do that?

## Karl says:

I don’t think this is the calculator you’ll want to use. It will calculate a loan balance after a scheduled payment (see the calculator’s amortization schedule), but it assumes the payments are made as scheduled.

I recommend looking at the loan payoff calculator on this site. It’s designed to calculate payments on the actual date paid. Check it out. If you have any questions, just ask.

## Steven Peters says:

I am confused, I have a loan in which the payor makes monthly payments and sporadic and variable amounts of principal payments. I used to use one of your calculators for this. It had a screen in which I could input the date and amount of principal payments and it would recalculate the loan and amortization schedule. Cannot find the calculator, have you discontinued it?

## Karl says:

I think you are looking for the loan payoff calculator.

## Steven Peters says:

Thanks, preferred your version that allowed you to enter extra principal payments on a separate page with date and amounts. Thanks again.

## Karl says:

Hi Steven, the recommended calculator allow you to enter extra payments. I assume you saw that. However, I don’t recall ever having a calculator where the extra payments were shown on a separate page. No calculator has been dropped from this site either. So perhaps the calculator you are thinking of was on another website?

## Tan says:

Hi Karl,

Thanks for your plugin. This is awesome !

How i can download lastest Loan Calc Plugin ? WordPress version is 1.3

And how i can change Currency decimal ? For example, to display $32,500 instead of $32,500.00

Thanks again.

## Karl says:

Hi Tan,

The download link is located on the right side of this page.

The calculator, however, will always show two decimal digits.

## Angel Mortenson says:

Hi Karl,

How do I calculate a land sales contract with the following?

30 year amortization, 5 year balloon, 6% interest, loan amt $245,000, monthly pmt of $1000.00 which started on 12/01/2017 and one additional pmt of $5000.00 on 03/2019 ???

I have tried several ways without any success…

Thanks,

Angel

## Karl says:

First, a couple of things. Since you are stating the payment amount ($1,000) 30 year amortization is not relevant to this calculation.

Secondly, the $1,000 a month does not cover the interest due on a $245,000 loan @ 6% – so you have what is known as negative amortization. That is, the balance, rather than being paid down is growing.

Those things aside, you can set the calculator as follows and get an accurate amortization schedule.

Options tab:

## Susan Laderoute says:

I am trying to find a schedule that I can input two payment amounts but I don’t have the interest rate only the payment amounts and the loan amount. I tried the loan calculator but it doesn’t allow for multiple payments (unless I am missing something).

## Karl says:

I think I understand. You want to solve for an unknown interest rate, and (this is what I’m not so sure about) there are only 2 payments and they are for different amounts, or there are two series of payments, and each series if for a different amount?

Either way, there is a calculator on this site that will solve for the rate for you when there are different payment amount. Please try the Ultimate Financial Calculator. Scroll down the page for tutorials. You can have 2 series of payments, each series for different amounts.

## Susan Laderoute says:

Thanks Karl. The first payment amount is for 6 periods and then the 2nd payment amount is for 53 periods. I have tried that one and have entered the loan and the different payments but it won’t let me not put a value in the interest rate

## Karl says:

For unknown values (including "Initial Interest Rate") enter "U" for unknown.

## Ryan says:

Hello,

Thank you for your calculator. Unfortunately it has flawed math. Check this out:

$12K loan amount, 5.75% annual interest rate, quarterly payment frequency and compounding quarterly. Amortization method normal

Total interest for:

4 payments: $448.21

8 payments: $669.41

12 payments: $531.37

Notice how the interest goes up for a 2 year (8 payments) and down for a 3 year (12 payments) loan. Interest payments should go up for a longer term!

Thank you.

## Karl says:

You’re welcome.

You’re information is incomplete. What is the loan date and the first payment date for each case? How are your long and short period options set.

The calculator is very sensitive to all option settings. Not saying it is not possible, but I doubt at this stage, after being used for years, that there is a calculation bug. I myself run 1,400 automated tests on it when making a change.

## Ryan says:

Hello Karl, glad to hear you automate your testing. All other fields were default, so you can load the page like a visitor and put in the inputs I provided. For your question however, loan date, 1/1/2020. First payment due, 2/1/2020, long period ‘with origination’, short period ‘reduce first’, fiscal year end, December. Hope that helps

## Karl says:

Hi Ryan. Thanks for the details. I’m not getting the results you mentioned earlier. I don’t see where you mentioned the payment amount – so I’m assuming that you are asking the calculator to calculate payment by entering a 0 each time.

When I do that, I get the following total interest:

4 payments, $3,108.58 quarterly payment amount, $320.42 total interest.

8 payments, $1,598.65 quarterly payment amount, $675.27 total interest.

12 payments, $1,095.88 quarterly payment amount, $1,036.67 total interest.

When you first posted, I read the comment quickly, and I was thinking that the payment frequency was also changing. You clearly stated that payment and compounding are quarterly. Had they been changing though, the short/long period options would have been more important.

But anyway, I see that 12 payments requires that more interest than 8 or 4 payments.

When the payment amount is left the same between 8 and 12 payments, then the loan is paid off prior to 12 payments and if you look at the schedule the loan balance is negative and the cash flow starts to earn interest. 🙂 a bit strange, I admit. But what should happen is, the user should allow the calculator to calculate at least one unknown – usually number of payments if user provides a payment amount.

## Ryan says:

I see now. The calculator is working, I just didn’t have a $0 for the payment amount. So when I hit calc the first time, it filled in the payment amount. Then changing the number of payments then causes it to calculate “incorrectly”.

I design web app UIs for a living, I would recommend changing something up so that users make proper calculations. I think many users would want to change the number of payments to see what that would change in the payment amount, but I wouldn’t expect to have to zero out the payment amount value each time to recalculate. Hope that feedback helps. Otherwise now that I know how to work it, I can see how it calculates properly!

## Karl says:

Thanks for your feedback, Ryan.

I understand your point. However, I want the calculator to support "one-off" loans. Meaning, what if someone wants to borrow $50,000 for 72 months @ 4.5%? The "normal"e payment is about $793 for this scenario. But, what if the borrower says I’ll pay $1,000 a month? By letting the user provide all inputs, the calculator will create an accurate payment schedule. If I forced a recalculation of any one of the inputs, then the user would not get what they want.

In such cases, you might say, well adjust the number of payments. I could do that, but then what if the borrower said I want to pay $1,000 a month and I’ll pay the balance in 24 months? By letting the user enter 24 months, the calculator will handle this scenario as well (that is, there will be a large final payment or as it is known, a balloon payment).

So, I’m not sure how I can handle an automatic recalculation of one of the user inputs and still give users full control. The interface does say to enter a "0" for one unknown. Thus it implies that if a user enters all 4, the calculator will use the values provided. Perhaps, I should not imply it though?

I have also thought of adding a message: "There are no unknown values. Did you want the calculator to calculate the term?" Or something along this order. But then I thought that users would get annoyed with the message once they understood how the calculator functioned.

I think it’s the classic trade-off – ease-of-use vs features.

## Margaret Lockyear says:

Hello. I really appreciate your calculators and have used them many times in the past.

For another one I am working on now, for obtaining the repayment schedule using the loan calculator, I know the loan amount, and the weekly repayment amount, but not the interest rate, only the total interest which will be charged over the life of the loan, 78 weeks. How best to do this?

Thank you in anticipation

Kind regards

## Karl says:

Thank you! Glad you find them useful.

I think the first thing you should do is confirm the math. Does 78 times the payment amount minus the loan amount equal the total interest you expect? That is:

(78 x pmt) – loan amount = total interest

I only mention this, because usually people don’t know the total interest, and I think since you do, that’s worth checking.

But to answer your question, enter the 3 values, loan amount, number of payment and payment amount and enter 0 for annual interest rate.

Click "Calc" and the calculator will calculate the rate for your.

Hope this helps.

## Margaret Lockyear says:

Perfect, thank you!

## James says:

I have several student loans with different interest rates and balances. I want to compare the repayment type depending on which option I choose: smallest balance first, highest interest first, consolidate on lover balance and pay additional etc. Could you upgrade your calculator to include the most common options and the ones I just mention?

## Karl says:

The first thing I think you should do is check out this debt reduction calculator. This calculator is specifically designed to work with multiple loans at the same time and already it has the options you mentioned.

Let me know if you have any questions.

## Ryan says:

Karl, thanks for responding. I don’t have any great ideas on this (having lots of flexibility), but I do like instantly updating calculators. Perhaps a function similar to a radio button on what to calculate for would help? Anyway, thanks for clearing up my confusion on how the calc worked.

## Karl says:

Hi Ryan. It’s a tough design problem (at least for me). I’ve thought of checkboxes (not radio button because I want the option of having none checked – don’t know if I can have no radio buttons selected in a group?), but that will add to the width I guess and thus make it more crowded on mobile devices. I’ve thought of an option on the options tab – "Force recalc of last unknown?" Yes/No. But don’t know what default to use for the option. A lot of people may not find it, and if they found it, they might not know why there’s a choice. People don’t want to read. After all, all of this is explained in the text on this page! And we see how people can miss that. 🙂

## John Paul says:

i want a calculator that can do this: see example below

e.g Loan is 500,000 and tenor is 5 months at 5% flat

Monthly principal will be 500,000/5 = 100,000

Monthly interest will be 500,000×0.05 = 25,000

Monthly repayment 100,000 + 25,000 =125,000

## Karl says:

What you want is a "Fixed Principal" loan. The calculator supports that. See under "Amortization Method" the fixed principal setting.

The monthly interest will actually vary (it will decrease) as the principal is paid down. The amount will decline.

The 5% rate, that’s not an annual rate? Interest is really 5% a month? If so, you’ll need to convert it to an annual rate and enter the converted rate into the calculator.

## Dean says:

Hi Karl,

What is the difference between the normal amortization method and the interest only amortization method options on the calculator? Thanks in advance for the clarity.

## Karl says:

Hello Dean, with the normal amortization method part of each payment is applied to principal reduction. When a user selects interest only, 100% of the payment goes to pay the current period’s interest. There is no principal reduction.

Now, if you tried the calculator and didn’t see this difference, there is one caveat. (And I’m updating the text on the page this weekend to explain this.) You must always enter a 0 so the payment recalculates. If you did the normal calculation and then changed amortization to interest only and did not change the payment back to 0, the calculator will use the payment amount provided – which will be more than the interest-only payment.

The calculator works this way so that users can use mutually agreed on payment amounts and not a payment amount that the calculator calculates.

## Dean says:

For the normal method, what percentage of the payment goes towards the principal vs the interest? How is that determined?

## Karl says:

I don’t get involved in discussing equations. That’s a bottomless pit.

But the way (normal) amortization works, the interest due is calculated and added to the principal balance. Then the payment is deducted.