# Loan Calculator

Estimate the pay back amount required to fully pay back the principal and interest on a loan just as it matures. Also outputs the total interest accrued.

## How to use the loan calculator?

First enter the amount of the loan (principal) - this is how much credit you intend to take, then enter the nominal annual interest rate (APR, non-compounded rate) as well as the compounding period (usually monthly).

Proceed to enter the loan term (duration) pay back period which usually, but not always coincides with the compounding period.

The loan calculator will output the **pay back amount**, the total payment over the entire loan term as well as the total accrued interest rate. Note that it doesn't take into account fees for servicing the loan which would vary depending on the financial institution and your particular loan contract. The calculator can be used for most mortgage loans, car loans, student loans and personal loans popular on the market.

The calculator currently does not output a full amortization schedule, but let us know if you'd find it useful by dropping as an e-mail or commenting on our Facebook or Twitter (@gigacalculator).

## The mathematics of loan pay back

In most circumstances you would want to pay back your loan as it compounds the interest rate. Compounding means that the accrued interest rate is added to the principal and will accrue interest on its own in the next compounding period. For example, if your loan compounds monthly and you only pay it once a year you will be paying interest on the interest, slightly increasing the cost of the loan compared to making monthly payments.

Initially a big proportion of the payments you make go into covering the interest rate which is quite high initially: for example, 5% interest on a $50,000 loan equals $208.33 during the first month of repaying your loan but it only equals $117.09 by the beginning of year 5 of repaying a 10-year loan. Hence initially only a small portion of your payments cover the principal. The more you move towards the maturity date the more your payments will pay for the principal. This is why it is usually riskier to fall back on payments in the first years of a long-term loan rather than to have such issues further in the loan term.

## Financial caution

This is a simple loan calculator which is a good starting point in estimating the pay back amounts and total interest that you can expect to accrue on a loan if you are able to follow the payment schedule but is by no means the end of such a process. Crucially, its accuracy depends on the accuracy of your input which is a prognosis in itself and thus carries uncertainty and risk. You should always consult a qualified professional when making important financial decisions and long-term agreements, such as long-term mortgages, education loans, car loans, etc. Use the information provided by the calculator critically and at your own risk.

#### Cite this calculator & page

If you'd like to cite this online calculator resource and information as provided on the page, you can use the following citation:

Georgiev G.Z., *"Loan Calculator"*, [online] Available at: https://www.gigacalculator.com/calculators/loan-calculator.php URL [Accessed Date: 20 Sep, 2019].