This calculator will calculate the monthly payment and interest costs for up to four loans -- all on one screen -- for comparison purposes.
To calculate the payment amount and the total interest of any fixed term loan, simply fill in the 3 left-hand cells of the first row and then click on "Compute." Use the other three rows to see what effects are produced by changing any one of the loan's original variables.
Compare Loans for Better Deals
There are a number of things to consider when shopping for mortgages and other loans. Your total monthly payment represents the bottom line, but getting there requires a look at the formulas and figures governing each individual loan. Interest rates, loan amounts, and other fees associated with borrowing each play roles in the total amount you'll pay back. And loan terms are not always similar, so some provide significantly greater value than others.
What's in a Loan?
Loans are applied to cover all kinds of expenses, from property purchases to college tuition. Every loan is unique, reflecting agreements between borrowers and lenders. Regulations govern lending practices, but within the legal framework, individual creditors distinguish themselves with their own credit offers.
While loans are singular in nature, several components are commonly present across most lending arrangements. Promissory notes are key features of most deals, outlining each borrower's repayment responsibilities. The pledge to repay the loan stands as legal justification for collections in cases when payments are not made. Interest is also present on most borrower contracts, requiring a certain percentage of the total loan amount be paid-off in addition to the original principal balance. Most often, the interest attached to a loan is expressed as APR, annual percentage rate. Each billing period, the APR is broken down into term interest charges for each outstanding loan balance, determining the total amount of each required payment.
Compare and Contrast Loans
Comparing apples to apples is easiest when banks and credit unions express themselves in similar terms, but there are no assurances that every lender will approach the experience in the same way. As a result, weighing benefits and costs associated with loans requires some analysis, to make sure all things are equal. Loan comparison calculator provides the ability to contrast as many as four scenarios at the same time, highlighting the loan terms most suited to your needs. There are several things to look at:
Principal – Individual loan terms are based on the amount being borrowed, which determines how much you'll pay back; but the size of a loan also carries weight establishing interest rates and other costs of borrowing. Large loans, for instance, sometimes enjoy more favorable interest rates, because those who qualify for them are excellent credit risks.
Interest Rates – Monthly payments and the total amount paid back over the life of a loan are closely tied to the base interest rate applied to loan balances. Some loans come with introductory rates attached, making total payments more difficult to calculate.
Monthly Payments – What you'll actually contribute toward debt repayment each month is an important concern as you compare loans. Lower monthly payments accommodate borrowers with limited cash flow, but lead to longer periods of repayment. Paying more each month taxes short-term budgets, but satisfying loan repayment ahead of schedule saves significantly on interest payments.
Fees – Origination and commitment fees add to the total cost of borrowing, which must be factored-in when comparing multiple loans, at once. In some cases, higher interest rates are offset by low fees, making the lowest-rate loans more costly; due to fees added-on to their regular interest payments.