Loan Calculator
Last reviewed on April 28, 2026.
Calculate monthly payments, total interest, and amortization schedules for any type of loan. Compare different loan options, understand the impact of extra payments, and make informed borrowing decisions.
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Understanding Loans
How Interest Works
Loan interest is calculated on the remaining principal balance. Early in the loan, most of your payment goes to interest. As the balance decreases, more goes to principal. This is why extra payments early in the loan save the most money.
The 28/36 Rule
Lenders typically want your housing payment below 28% of gross monthly income and total debt payments below 36%. For a $6,000/month income, that's $1,680 for housing and $2,160 for all debt payments.
Points vs Rate
Mortgage points let you buy a lower rate. One point costs 1% of the loan amount and typically lowers the rate by 0.25%. Points make sense if you'll keep the loan long enough for interest savings to exceed the upfront cost.
When to Refinance
Consider refinancing when rates drop 0.75-1% below your current rate. Factor in closing costs (2-5% of loan amount) and how long you'll stay in the home. The break-even point is typically 2-3 years.
Types of Loans
| Loan Type | Typical APR (2026) | Typical Term | Best For |
|---|---|---|---|
| 30-Year Mortgage | 7.32% | 30 years | Lower monthly payments, flexibility |
| 15-Year Mortgage | 6.75% | 15 years | Faster equity, less total interest |
| Auto Loan (New) | 7.5% | 3-7 years | New vehicle purchases |
| Auto Loan (Used) | 8.75% | 3-5 years | Used vehicles 1-5 years old |
| Personal Loan | 12.5% | 2-7 years | Debt consolidation, home improvement |
| Student Loan (Federal) | 5.50% | 10-25 years | Education expenses |
| Student Loan (Private) | 7-14% | 5-20 years | When federal aid insufficient |
| HELOC | 8.5% | 10-20 years | Home equity access, renovations |
Strategies to Pay Off Loans Faster
- Bi-weekly payments: Make half your monthly payment every two weeks (26 half-payments = 13 full payments/year)
- Round up payments: Round $1,847 to $1,900 or even $2,000
- Annual bonus: Apply tax refunds, bonuses directly to principal
- Refinance to shorter term: Move from 30 to 15 years when affordable
- Target highest rate first: Pay minimums on all, extra on highest APR
- Recast your mortgage: Large principal payment to lower monthly amount
Frequently Asked Questions
Should I pay off my mortgage early?
It depends on your rate and alternatives. If your mortgage is 4% and you can earn 7% investing, investing may be better. However, being debt-free provides psychological benefits and guaranteed savings on interest.
Fixed vs Variable Rate?
Fixed rates provide payment stability and protection from rate increases. Variable rates start lower but can increase. In 2026's rising rate environment, fixed rates offer more security for long-term loans.
How much can I afford to borrow?
Use the 28/36 rule: housing payment ≤ 28% of gross monthly income, total debt ≤ 36%. Also ensure you have 3-6 months emergency fund after down payment and closing costs.
What credit score do I need?
For best rates: 740+ for mortgages, 720+ for auto loans, 700+ for personal loans. You can qualify with lower scores but will pay higher rates. FHA mortgages accept 580+ with 3.5% down.