Repayment Calculator
The Repayment Calculator can be used to find the repayment amount or length of debts, such as credit cards, mortgages, auto loans, and personal loans. It can be utilized for both ongoing debts and new loans.
Result
Principal vs Interest
Amortization Schedule
| Payment # | Payment | Principal | Interest | Balance |
|---|
Frequently Asked Questions
Monthly loan payments are calculated using the standard amortization formula:
Where:
- M = Monthly payment
- P = Principal (loan amount)
- r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = Total number of months
Example: $10,000 loan at 10% for 5 years:
Total payments = $12,748.23
Total interest = $2,748.23
An amortization schedule is a detailed breakdown of each loan payment showing:
- Payment Amount: The fixed monthly payment (same for each payment)
- Principal Portion: Amount reducing your loan balance
- Interest Portion: Amount paid as interest to the lender
- Remaining Balance: Loan balance after the payment
Key Pattern: Early payments have more interest; later payments have more principal.
Compounding frequency determines how often interest is calculated and added to your balance:
- Monthly: Interest calculated 12 times per year (most common)
- Quarterly: Interest calculated 4 times per year
- Semi-Annual: Interest calculated 2 times per year
- Annual: Interest calculated once per year
More frequent compounding = higher total interest paid
Most loans use amortization schedules:
- Mortgages: Home loans typically 15-30 years
- Auto Loans: Car loans typically 3-7 years
- Personal Loans: Unsecured loans typically 2-7 years
- Student Loans: Education loans with various terms
- Credit Cards: Can use amortization if minimum payments are made
Several strategies can reduce total interest paid:
- Make Extra Payments: Pay more than minimum to reduce principal faster
- Shorter Loan Term: Choose 15 years instead of 30 years (higher payments but less interest)
- Lower Interest Rate: Refinance if you can get a better rate
- Larger Down Payment: Borrow less upfront to reduce interest on full amount
- Biweekly Payments: Makes 26 half-payments equals 13 full payments per year
Fixed Interest Rate: Stays the same throughout the loan term
- Predictable monthly payments
- Protected from rate increases
- Usually higher initial rate
Variable Interest Rate: Can change based on market conditions
- Lower initial rate (often)
- Payments can change over time
- Risk if rates increase significantly
Most loans allow early repayment, though some may have penalties:
- Federal Student Loans: No prepayment penalty
- Mortgages: Check for prepayment penalties in your contract
- Auto Loans: Most allow early payoff without penalty
- Personal Loans: Most allow prepayment without penalty
Benefit: Early payment significantly reduces total interest and shortens the loan term.
Total interest is simple to calculate:
Example: $10,000 loan at 10% for 5 years
Number of payments = 60
Total payments = $212.47 × 60 = $12,748.23
Total interest = $12,748.23 - $10,000 = $2,748.23