How to use it
- Enter the amount you're borrowing, the interest rate and the term in months.
- Pick how the rate is quoted. Most US loans quote an APR, which is divided by 12 to get the monthly rate.
- Optionally add an extra payment per month to see how much sooner you'd finish and how much interest you'd skip.
Fixed payment vs. constant principal
Fixed payment (also called the French or annuity method) is what almost every car loan, personal loan and US mortgage uses: the payment is the same every month, but early payments are mostly interest and later ones are mostly principal.
Constant principal (known in Brazil as SAC) pays down the same slice of the loan every month. Payments start higher and shrink over time, and the total interest is lower because the balance falls faster.
Why extra payments matter so much
Interest is charged on the remaining balance. Every extra dollar you pay goes straight to principal, so it stops generating interest for the rest of the loan. On long loans like mortgages, even a small extra payment can cut years off the term.
Frequently asked questions
Is the result exact?
It uses the standard amortization formulas, so it matches what most lenders calculate. Your real loan may add fees, insurance or taxes that aren't included here.
What's the difference between APR and effective annual rate?
APR divided by 12 gives the monthly rate most US lenders use. An effective annual rate already includes compounding, so the monthly rate is found with (1 + rate)^(1/12) − 1, which is slightly lower.
Does an extra payment lower my monthly payment?
In this calculator it shortens the loan instead, which is how most lenders apply extra principal by default. Ask your lender if you'd prefer to re-amortize.