## Loan calculator: calculate your loan online

Are you considering taking out a personal loan from a bank? Would you like to calculate your monthly payments for your loan? Our online loan calculator can assist you.

To calculate your monthly payment, please provide the following information:

- Loan Amount: This is the amount that you want to borrow. For example, if you want to purchase a car and need a car loan of $50,000.

- Loan Term: This is how long you plan to take to repay the loan. For instance, you might choose to pay off your car loan over a period of 5 years.

- Interest rate: This is the cost of borrowing money, expressed as a percentage of the amount you borrow. For example, if the interest rate on a car loan is 7% per year, then you will pay 7% of the loan amount in interest each year.

Once you enter your information into the calculator, it will calculate your monthly loan payment. For example, if you have a loan of $50,000 with an interest rate of 7% for 5 years, your monthly payment would be $990.06.

The loan payoff calculator is a type of financial calculator. The monthly loan payment calculator can help you decide whether taking out a loan is the right choice for you and on what terms. If the monthly payment seems too high, it might be a good idea to explore other loan options or consider reducing the amount of the loan you are applying for.

## Monthly payment = annuity payment

An annuity payment is a fixed amount that must be paid at regular intervals on a loan. It is divided into two parts: the principal and the interest. At the beginning of the payment, most of the money goes towards paying interest, while towards the end, it is used to repay the principal.

In order to calculate the monthly annuity payment, you will need to know the following information: the loan amount, the interest rate, the loan term, and the frequency of payments. There are several formulas that can be used to calculate the payment amount. For example, if you borrowed $100,000 for 5 years at an interest rate of 12% per year, your monthly payment would be:

A = (P × i) ÷ (1 – (1 + i)⁻ⁿ)

where A is the annuity payment, P is the loan amount, i is the monthly interest rate, n is the number of months.

А = (100 000 × 0,01) ÷ (1 - (1 + 0,01)⁻⁶⁰)

So your loan payment would be $2,224.44 per month. Total amount you will pay for 5 years will be:

S = A × n = 2,224.44 × 60 = $133,466.40.

Of this amount, $33,466.40 is an overpayment on the loan.

## Loan interest

Interest is the amount of money that is paid to the lender as a fee for borrowing money.

And the amount of accumulated interest is influenced by two factors: the interest rate and the principal amount of the debt. The interest rate indicates the cost of borrowing; the lower the rate, the cheaper the funds borrowed. The principal amount refers to the portion of debt on which interest is calculated.

### Types of interest rates

- Simple interest. In this scenario, interest earned on the principal amount is calculated and accounted for separately from the total debt, and it does not affect the overall value of the debt. This method of calculating interest has become common in the realm of consumer lending.
- Compound interest is the accrual of interest that is added to the principal amount of a debt. This results in a gradual increase in the total amount owed, on which more and more interest is charged over time. Compound interest is commonly used in long-term banking and investment activities, such as loans and investments in various assets.

### Interest calculation methods

There are two ways to calculate interest:

- Regular (decursive) - interest is calculated at the end of each accrual interval.
- Advance (antisipative) - interest is accrued at an initial point in time, so the borrower receives the amount less the interest money.

### Interest periods

Interest is usually calculated in discrete intervals, that is, in separate equal periods of time. This can be every year, every quarter, every month, or even every day. In today's banking world, many banks charge interest on a daily basis.

In financial mathematics, there is such a concept as continuous interest, which accumulates over small periods of time indefinitely.

## How is interest calculated on a loan?

Interest is calculated based on the following formula: the balance of the loan is multiplied by the interest rate and then divided by 365. This gives us the interest on the principal amount of the debt. This calculation is done every day, so the amount of interest gradually increases, rather than all at once.

After paying the monthly payment, the accrued interest is deducted from the total amount owed. The remaining funds are then used to reduce the principal balance. This process continues each month, with the interest calculated based on the decreasing debt balance.