Loan Calculator

Loan Calculator – Calculate the monthly payment and total cost of any loan

Whether it’s a consumer loan, renovation loan, student loan, or other financing, the true cost of the loan remains unclear to many until it’s too late. This versatile calculator helps to understand both the monthly payment and – most importantly – the total cost of the loan over its entire term.

Two ways to repay a loan

Annuity loan is the most common repayment method. In this case, the monthly payment remains exactly the same throughout the loan term, but the internal distribution of interest and principal repayment changes: at the beginning, most of the payment is interest and only a small part reduces the principal, while towards the end, the situation reverses. This makes budgeting easy, as the payment is always the same.

Equal principal loan, on the other hand, keeps the principal repayment amount the same every month, which means the interest portion – and thus the total monthly payment – gradually decreases over the loan term. The initial payments are larger than in an annuity loan, but the final ones are significantly smaller. The total interest costs remain slightly lower than in an annuity loan because the principal is reduced more quickly at the beginning.

What affects the total cost of the loan?

• Interest rate – even a small difference in interest can mean hundreds or thousands of dollars more to pay over a long loan term.
• Loan term – a longer loan term reduces the monthly payment but significantly increases the total amount of interest paid.
• One-time fees – setup and withdrawal fees are often added at the beginning of the loan, and they can be a significant part of the total cost of small loans.
• Monthly account management fees – a seemingly small monthly fee (e.g., $5/month) can accumulate to a surprisingly large amount over the entire loan term.

Remember the effective annual interest rate

The nominal interest rate alone does not tell the whole truth about the cost of the loan. The effective annual interest rate includes not only the nominal interest but also all costs associated with the loan – setup fees, account management fees, and other charges – into one comparable percentage. When comparing different loan offers, always use the effective annual interest rate, not just the nominal interest rate, as two seemingly similarly priced loans can differ significantly in their cost structure.

Interest rate cap for consumer loans

Rules vary by country, so check the rules that apply to you regarding interest and costs of consumer loans. If the loan offered to you approaches any legal limits or the costs are exceptionally high, it is advisable to look for alternative, cheaper financing solutions, such as a bank loan or installment payment.

Tips for finding the cheapest loan

• Always compare loans from multiple sources – banks, finance companies, and loan brokerage services often offer very different terms.
• Find out if you can repay the loan with extra payments without additional costs – this can save significantly on interest expenses.
• Always compare loans based on the same loan term and amount to ensure a fair comparison.

The calculator is indicative and does not automatically include all possible additional costs – enter them yourself into the calculator to get a more accurate picture of the total cost.