Simple Loan Calculator

How Our Simple Loan Calculator Works

A loan estimator takes the total price of the loan and gives you an idea of what the total cost will be after interest. Whether it’s a personal loan, college loan, or auto loan, this will give you an idea of how much you’ll pay during the loan term.

It’s easy to make the mistake of just looking at what your monthly payments will be before signing for a loan. But loan payments aren’t always straightforward, and at the end of the day fees and interest payments can add a significant amount.

The simple loan calculator view gives you the basics of what you need to know about your loan. It shows:

• Loan amount: The original loan price before applying interest.
• Loan term in months or years: Your loan will have a certain duration of time. A longer loan term means lower monthly payments, but you’ll pay more in interest.
• Interest rate (APR): The interest rate is a percentage that's essentially a fee for borrowing the money. Ideally, you want the lowest interest rate possible, often depending on your credit.
• Monthly payments: How much you’ll pay each month.
• Total interest amount: The total amount of interest you'll pay in, on top of your loan amount.

The extended loan calculator will also show you an amortization schedule*—an accounting tool that gives you a full breakdown of your loan from month to month. The scheduler helps you see what your remaining balance will be each month and how your payments divide between the amount paid toward your principal and toward interest. It also shows the predicted loan payoff date.

*Note: Please bear in mind that these are estimates, for an exact accounting of your loan please contact your bank, lender, or loan officer.

Why You May Need a Personal Loan

Loans make it possible for larger purchases that would be difficult for most people to pay in full. People take out loans for college, buying a home or getting a car, but many people also take out smaller personal loans for a wide range of reasons.

Banks and other financial institutions provide people with loans in exchange for interest fees. How much interest you pay may depend on a variety of factors, but one major factor is your credit. When you have a good credit profile and good credit score, you’ll receive better interest rates. This is important because this changes the overall price of your loan.

For example, the average car loan interest rate for someone with a 700 credit score is 5.82%, but it’s over 10% for someone with a credit score of 550. This is the difference of thousands of dollars when purchasing a car.

Loans are also either secured or unsecured. Many personal loans are unsecured, but home and auto loans are secured, which means you provide collateral. Additionally, the bank may repossess your property if you don’t make your monthly payments on a secured loan.

Using our loan calculator will help you see if the interest rate is worth the loan and whether or not you can afford the monthly payments.

8 Common Loan Types

You can use Credit.com’s simple loan calculator for various types of loans. Below, we’ve listed some of the most common types and what they’re for.

Mortgage Loan

A mortgage loan calculator will give you an idea of what your monthly payments will be for a house. You can use this calculator to get an idea of how much you’ll pay each month for your mortgage, but home loans do have additional factors to consider, like the down payment or private mortgage insurance.

You can subtract your estimated down payment amount from the cost of the home to get an idea of your monthly payments. Then, use that total loan amount along with the other information.

Home Equity Loan

Also known as “second mortgages,” home equity loans are a loan you take out with the bank by borrowing against the equity of your home. The equity of your home is its appraised value, so if it’s worth more than when you bought it, you have positive equity. Many people use home equity loans as a way to make home improvements, or as a personal loan for other expenses.

With these loans, you receive a lump sum and pay it off with a fixed interest rate for five to twenty years.

Home Equity Line of Credit (HELOC)

Unlike a home equity loan, a home equity loan is a revolving line of credit, like a credit card. If you have positive equity in your home, you can take out a line of credit and use it as needed. Once you spend a certain amount, you can pay it back, and those funds will be available to you again.

This type of loan may have a variable interest rate, which means it can get higher from month to month.

Auto Loan

You can also use this calculator to estimate your auto loan payments (or you can use our dedicated auto loan calculator). Similar to a home loan calculator, you also need to consider any down payment you plan on putting down for a vehicle because it will change the overall loan amount. Vehicles also come with some additional costs to keep in mind, like:

• Taxes
• Document fees
• Registration fees

Student Loan

Higher education can cost tens of thousands or even hundreds of thousands of dollars, which is why many people take out student loans. You may receive one of these loans from the government, a private lender, or both. The loan calculator can help give you an idea of what your payments will be like after graduation but also remember that some student loan forgiveness programs may be able to help with the costs.

Personal Loan

The simple loan calculator is ideal for personal loans, and people take out personal loans for many reasons. With a personal loan, you can use the funds for a variety of large purchases, and some people use a personal loan to consolidate their other debts into one simple payment. Using the loan calculator, you can see how long it will take to pay off your loan at a specified interest rate, as well as how much interest you’ll pay over time.

Secured Loan

Secured loans require collateral—mostly commonly homes or vehicles. You may also take out a secured loan for furniture or other large purchases for your home. These loans often have competitive rates and may be easier to acquire if you have a lower credit score, but should you miss payments, the property may be repossessed.

Unsecured Loan

The most common type of unsecured loan is a credit card, but many other loans, like personal and student loans, are usually unsecured as well. If you don’t make payments on these, you’ll keep your property, but missed payments will show up on your credit report and can lower your score. Nonpayment on these items can make it difficult to take out loans and apply for lines of credit in the future.

5 Questions to Ask Before Taking Out a Loan

Before taking out a loan, some considerations can help you determine if it's the right move for you. Depending on the size of the loan, it can take years to pay off, and if you’re not prepared for the payments and interest rate, you may accumulate unnecessary debt.

Here are some questions to ask before taking out a loan:

1. Is a loan the best option? Like most other forms of debt, loans come with interest payments. For some, finding an extra source of income or borrowing from a friend or family member can save money on interest payments while providing them with the necessary funds.
2. Are the payments within your budget? In addition to your regular loan payments, it’s helpful to review your other monthly expenses and ensure you can make your payments in full and on time.
3. Have you compared rates? Many different banks and financial institutions provide loans, and some may offer much better interest rates. It’s a good rule of thumb to research at least three options before deciding on a loan.
4. Are you going with a secured or unsecured loan? Unsecured loans often have better rates, but you have to put up collateral and may lose your property if you miss payments.
5. Should you wait and improve your credit first? Your credit is a primary factor lenders consider when offering loans. For some people, waiting and improving their credit (and credit score) is the best option.

How Your Credit Affects Your Loan

Your credit can make the difference between hundreds or even thousands of dollars on the overall cost of your loan. For that reason, you may want to wait to improve your credit before taking out any type of loan because you’ll save money in the long run.

If you’re unsure of your credit health, Credit.com offers a free credit report card that will show you where you stand and what areas you need to work on to improve your score.

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