Understanding Loan Payments
This calculator uses the standard amortization formula to determine your monthly loan payment. The payment includes both principal (the loan amount) and interest.
Loan Calculator
Calculate monthly loan payments, total interest, and amortization schedule for any loan amount and term.
Monthly Payment
AI Explanation
Key Factors Affecting Your Payment
Your monthly payment is determined by three main factors:
- Loan Amount: The total amount you borrow
- Interest Rate: The annual percentage rate (APR)
- Loan Term: The number of years to repay the loan
- Lower interest rates or longer terms reduce monthly payments
FAQs
What is included in my monthly payment?
Your monthly payment includes both principal (paying down the loan amount) and interest charges. In the early years, more goes toward interest; later, more goes toward principal.
Should I choose a shorter or longer loan term?
Shorter terms have higher monthly payments but lower total interest. Longer terms have lower monthly payments but higher total interest. Choose based on your budget and long-term goals.
How can I lower my monthly payment?
You can lower your monthly payment by: making a larger down payment, extending the loan term, improving your credit score to get a lower interest rate, or choosing a less expensive option.