Loan Calculator - Arabic Numerals

Why does my actual loan payment differ from what the calculator shows?

The calculator computes the pure principal-and-interest payment using the amortisation formula. Your lender may add escrow for property taxes, insurance, or PMI on top of that base payment. Origination fees and closing costs are also not included. If your quoted payment is higher than what this calculator shows, ask your lender for a fee breakdown — the difference is almost always escrow or fees, not a miscalculation.

What is the difference between APR and interest rate?

The interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus origination fees, closing costs, and other one-time charges expressed as an annual rate. A 5% interest rate with $2,000 in fees on a $100,000 loan could result in an APR of 5.5% or more. APR is the better number for comparing loan offers from different lenders because it includes the total cost of borrowing.

How much money does a 1% interest rate difference actually save?

On a $300,000 30-year loan, the difference between 6% and 7% interest is $199 per month — and $71,640 over the full term. This is why shopping for the best rate matters more than many borrowers realise. Use the comparison view to model two rates side by side and see the lifetime cost difference.

Should I make extra payments on my loan?

Extra payments reduce your principal faster, saving you interest and shortening your loan term. Even small extra payments (like $50-$100/month) can save thousands in interest over the life of the loan. Use our calculator's extra payment feature to see the exact savings.

What payment frequencies are available?

We support weekly, bi-weekly, monthly, quarterly, semi-annual, and annual payment frequencies. Bi-weekly payments (26 payments/year) can save you interest compared to monthly (12 payments/year) because you make extra principal payments throughout the year.

How does an amortisation schedule work and why does the interest portion change over time?

An amortisation schedule splits each payment into interest and principal components. In the early years, most of each payment goes toward interest because the outstanding balance is large. As you pay down principal, the interest portion shrinks and the principal portion grows. On a $200,000 loan at 7% over 30 years, the first payment sends $1,163 to interest and only $131 to principal. By year 25, the split reverses — $433 to interest and $861 to principal. This is why extra payments early in the loan have an outsized impact: every dollar of principal you remove early eliminates years of future interest on that dollar.

What is the difference between a fixed-rate and a variable-rate (adjustable-rate) loan?

A fixed-rate loan keeps the same interest rate for the entire term, so your monthly payment never changes. A variable-rate loan (also called an adjustable-rate mortgage or ARM for home loans) has a rate that changes periodically based on a benchmark index. ARMs typically start with a lower rate than fixed loans (a "teaser" rate) for an introductory period (e.g., 5 years), then adjust annually. ARMs are riskier — your payment can increase significantly when the rate adjusts — but can save money if rates stay flat or fall. Use this calculator to model both scenarios: enter the fixed rate to see the stable payment, then enter the ARM's initial rate and consider what happens if it rises by 1-2% at the first adjustment.

How do I calculate the total cost of a loan including all fees?

The total cost of a loan is the sum of all payments over the term plus any upfront fees. For a $250,000 loan at 6.5% over 30 years, the monthly payment is $1,580 and total payments come to $568,800 — meaning you pay $318,800 in interest alone. Add origination fees (typically 0.5-1% of the loan, so $1,250-$2,500), closing costs, and any mortgage insurance to get the true total cost. The calculator shows the total interest figure; add your fees manually to get the all-in cost.

What is a balloon payment and how does it affect my monthly payments?

A balloon loan has lower monthly payments during the term because a large lump sum (the balloon) is due at the end. For example, a $100,000 loan at 6% with a 5-year term and a $50,000 balloon payment would have monthly payments of only $644 instead of $1,933 (the full amortisation payment). Balloon loans are riskier — you must either save up for the balloon, refinance it into a new loan, or sell the asset. They are common in commercial real estate and some auto loans. This calculator does not directly model balloon payments, but you can approximate the effect by using a longer amortisation period (e.g., 30 years) with a shorter actual term (e.g., 5 years) — the remaining balance at the end of the term is your balloon.

How does my credit score affect the interest rate I get?

Lenders use your credit score to assess risk. Higher scores qualify for lower rates. In the US, a borrower with a 780+ credit score might get a 6.5% rate on a 30-year mortgage, while a borrower with a 620 score might get 7.75% or higher. On a $300,000 loan, that 1.25% difference costs $260 more per month and $93,600 more over the full term. Before applying for a loan, check your credit score and consider improving it — even a 20-30 point increase can save thousands. Get pre-approved by multiple lenders to compare offers, as each lender may price risk differently.

What is the debt-to-income (DTI) ratio and why do lenders care about it?

Your DTI ratio is your total monthly debt payments divided by your gross monthly income. Most lenders require a DTI of 43% or lower for conventional mortgages, though some allow up to 50% for FHA loans. For example, if your gross income is $6,000/month and you have a $300 car payment, $200 in student loans, and a $1,500 mortgage payment, your DTI is 33% ($2,000 / $6,000). Use this calculator to find your monthly payment, then divide by your gross monthly income to check your DTI before applying. A lower DTI gives you more borrowing room and better rates.

Should I refinance my loan, and how do I calculate the break-even point?

Refinancing replaces your existing loan with a new one at a different rate or term. To decide if it is worth it, calculate the break-even point: divide the closing costs of the new loan by the monthly savings. If refinancing saves you $200/month and closing costs are $4,000, the break-even point is 20 months — if you plan to stay in the home longer than that, refinancing pays off. Use this calculator to compare your current rate and payment with the new rate and payment. Remember that refinancing resets the amortisation clock, so even with a lower rate, you may pay more total interest if you extend the term again.

Can I use this calculator for different types of loans — personal, auto, student?

Yes. The amortisation formula is the same regardless of loan type. Enter the loan amount, interest rate, and term for any instalment loan: a $30,000 car loan at 7% for 60 months, a $50,000 personal loan at 12% for 36 months, or a $25,000 student loan at 6.8% for 120 months. The calculator shows the monthly payment, total interest, and full amortisation schedule. For student loans with a grace period, start the amortisation from the repayment date, not the disbursement date.

Are these the same numerals used in Iran and Afghanistan?

No. Iran and Afghanistan use Persian (Farsi) numerals (۰–۹), which look similar but have different glyph forms for 4, 5, and 6. This calculator has a separate Persian numeral mode for those digits.

Input: $10,000 loan at 8% annual interest for 3 years

Result: Monthly payment: $313.36. Total interest: $1,281.09. Total repayment: $11,281.09.

Input: $25,000 car loan at 6.5% for 5 years

Result: Monthly payment: $489.16. Total interest: $4,349.60. Total repayment: $29,349.60.