Loan Calculator
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 can generally be classified into three main types:
- Amortized Loan: Regular fixed payments are made over the loan term until it is fully repaid.
- Deferred Payment Loan: A single lump sum payment is made at the end of the loan term.
- Bond: A predetermined lump sum (face or par value) is paid at maturity.
Adjust the values below and click “Calculate” to see the results.
Amortized Loan: Fixed Periodic Payments
This calculator is useful for common loan types like mortgages, auto loans, student loans, or personal loans. For more detailed calculations, explore the specific loan calculators linked below.
Input:
- Loan Amount: $100,000
- Loan Term: 10 years, 0 months
- Interest Rate: 6%
- Compounding: Monthly (APR)
- Payment Frequency: Monthly
Results:
- Monthly Payment: $1,110.21
- Total of 120 Payments: $133,224.60
- Total Interest Paid: $33,224.60
- Principal vs. Interest: 75% Principal, 25% Interest
View Amortization Table
Deferred Payment Loan: Lump Sum Due at Maturity
This type of loan is common in commercial or short-term lending, where the entire principal and interest are paid in a single lump sum at maturity.
Input:
- Loan Amount: $100,000
- Loan Term: 10 years, 0 months
- Interest Rate: 6%
- Compounding: Annually (APY)
Results:
- Amount Due at Maturity: $179,084.77
- Total Interest Paid: $79,084.77
- Principal vs. Interest: 56% Principal, 44% Interest
View Schedule Table
Bond: Predetermined Lump Sum at Maturity
This calculator helps determine the initial value of a bond or loan based on a predetermined face value to be repaid at maturity.
Input:
- Predetermined Due Amount: $100,000
- Loan Term: 10 years, 0 months
- Interest Rate: 6%
- Compounding: Annually (APY)
Results:
- Amount Received at Start: $55,839.48
- Total Interest Paid: $44,160.52
- Principal vs. Interest: 56% Principal, 44% Interest
View Schedule Table
Loan Types Explained
Amortized Loan: Fixed Periodic Payments
Amortized loans are the most common type, featuring regular payments that cover both principal and interest over the loan term. Examples include mortgages, car loans, student loans, and personal loans. For more specific calculations, use the following calculators:
- Mortgage Calculator
- Auto Loan Calculator
- Student Loan Calculator
- Personal Loan Calculator
Deferred Payment Loan: Lump Sum Due at Maturity
These loans require a single payment of principal and interest at maturity. They are often used in commercial or short-term lending. Balloon loans may also fall into this category, though they sometimes include smaller periodic payments.
Bond: Predetermined Lump Sum at Maturity
Bonds are a unique type of loan where the borrower repays a fixed amount (face value) at maturity. Common bond types include:
- Coupon Bonds: Pay periodic interest (coupons) based on a percentage of the face value.
- Zero-Coupon Bonds: Sold at a discount and pay no periodic interest; the face value is repaid at maturity.
The calculator above is designed for zero-coupon bonds. Note that bond values can fluctuate during their lifetime due to market conditions, but the maturity value remains fixed.
Loan Basics for Borrowers
Interest Rate
Interest is the cost of borrowing, expressed as a percentage of the loan amount. It is typically calculated as an Annual Percentage Rate (APR), which includes both interest and fees. For savings accounts, the Annual Percentage Yield (APY) is used, reflecting compounded interest.
Compounding Frequency
Compounding refers to earning interest on both the principal and accumulated interest. The more frequent the compounding, the higher the total interest paid. Most loans compound monthly.
Loan Term
The loan term is the duration over which the loan is repaid. Longer terms generally result in lower periodic payments but higher total interest costs.
Types of Consumer Loans
Secured Loans
Secured loans require collateral, such as a house or car, which the lender can seize if the borrower defaults. Examples include mortgages and auto loans. These loans typically have lower interest rates and higher approval chances.
Unsecured Loans
Unsecured loans do not require collateral but rely on the borrower’s creditworthiness. They often have higher interest rates and stricter eligibility criteria. Examples include credit cards, personal loans, and student loans.
Lenders assess unsecured loan applicants using the Five C’s of Credit:
- Character: Credit history and reliability.
- Capacity: Debt-to-income ratio.
- Capital: Savings or assets.
- Collateral: Only for secured loans.
- Conditions: Loan purpose and economic climate.
If a borrower defaults on an unsecured loan, lenders may hire collection agencies to recover the debt.
Additional Resources
For more detailed calculations, explore these specialized calculators:
- Mortgage Calculator
- Auto Loan Calculator
- Student Loan Calculator
- Personal Loan Calculator
- Credit Card Calculator
- Investment Calculator
Understanding the nuances of loans can help borrowers make informed financial decisions. Use the calculators above to explore different scenarios and find the best loan options for your needs.