Loan Calculator

A loan is a financial agreement between a borrower and a lender, where the borrower receives a sum of money (principal) that must be repaid over time. Loans generally fall into three main categories:

1. Amortized Loan – Fixed periodic payments until the loan is fully repaid.
2. Deferred Payment Loan – A lump sum payment due at loan maturity.
3. Bond – A predetermined amount paid at maturity, known as the face or par value.

Amortized Loan: Periodic Fixed Payments

This loan type applies to common loans such as mortgages, auto loans, student loans, and personal loans.

Example Calculation:

• Loan Amount: $100,000
• Loan Term: 10 years
• Interest Rate: 6% (compounded monthly)
• Repayment: Monthly

Results:

• Monthly Payment: $1,110.21
• Total Payments (120): $133,224.60
• Total Interest Paid: $33,224.60

View Amortization Table for details.

Deferred Payment Loan: Lump Sum Payment at Maturity

Used in commercial or short-term loans where the full amount (principal + interest) is due at maturity.

Example Calculation:

• Loan Amount: $100,000
• Loan Term: 10 years
• Interest Rate: 6% (compounded annually)

Results:

• Amount Due at Maturity: $179,084.77
• Total Interest Paid: $79,084.77

View Schedule Table for details.

Bond: Predetermined Payment at Maturity

Bonds operate differently from conventional loans, where a borrower repays a fixed face value at maturity.

Example Calculation:

• Predetermined Due Amount: $100,000
• Loan Term: 10 years
• Interest Rate: 6% (compounded annually)

Results:

• Initial Amount Received: $55,839.48
• Total Interest Paid: $44,160.52

View Schedule Table for details.

Loan Basics

Interest Rate

Most loans include interest, which is the lender’s profit. Interest is usually expressed as APR (Annual Percentage Rate) for loans and APY (Annual Percentage Yield) for savings accounts. Use the Interest Calculator or APR Calculator to understand actual interest costs.

Compounding Frequency

Interest can be compounded at different intervals (e.g., monthly, annually). More frequent compounding results in higher total interest. Use the Compound Interest Calculator to see its impact.

Loan Term

The duration of the loan affects its cost. Longer loan terms reduce monthly payments but increase total interest paid.

Types of Consumer Loans

Secured Loans

Require collateral, such as a home or car, which the lender can seize if the borrower defaults. Examples include:

• Mortgages (home loans)
• Auto Loans (car loans)

Secured loans typically have lower interest rates and higher approval chances.

Unsecured Loans

Do not require collateral but rely on creditworthiness. These loans often have higher interest rates and shorter repayment terms. Examples include:

• Credit Cards
• Personal Loans
• Student Loans

Lenders evaluate borrowers based on the Five C’s of Credit:

1. Character: Credit history and past payment behavior
2. Capacity: Ability to repay (income vs. debt ratio)
3. Capital: Additional assets like savings or investments
4. Collateral: Applies only to secured loans
5. Conditions: Economic factors and loan purpose

Unsecured loans may require a co-signer and can be subject to collection agencies if not repaid.

Specialized Loan Calculators

For more detailed calculations, use:

• Mortgage Calculator
• Auto Loan Calculator
• Student Loan Calculator
• FHA Loan Calculator
• VA Mortgage Calculator
• Investment Calculator
• Business Loan Calculator
• Personal Loan Calculator

These tools provide tailored insights based on your specific loan type.