How loan payments are calculated
Loans use the standard amortization formula. Each month you pay interest on the remaining balance plus a slice of the principal, in fixed instalments. Early payments are mostly interest; later ones are mostly principal. The formula sets a level payment so the loan reaches zero exactly at the end of the term.
The number lenders don't advertise
Stretching a loan over more years lowers the monthly payment but raises the total interest — sometimes dramatically. Always compare the total repaid, not just the monthly figure. Paying a little extra each month can cut the total sharply.
Frequently asked questions
Is this APR or interest rate?
This uses the nominal annual interest rate. APR also folds in certain fees, so a loan's APR may be slightly higher than the rate you enter here.
Does it include fees or insurance?
No — it's principal and interest only. Origination fees and optional insurance would add to the real cost.