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Loan Calculator

Amortized Loan Calculator

years months
Payment Each Period: $1,110.21
Total of 120 Payments: $133,224.60
Total Interest: $33,224.60
Formula:
Payment = Principal × [r(1+r)^n] / [(1+r)^n - 1]
Where:
r = periodic interest rate
n = total number of payments

Deferred Payment Calculator

years months
Amount Due at Loan Maturity: $179,084.77
Total Interest: $79,084.77
Formula:
Future Value = Principal × (1 + r)^t
Where:
r = interest rate per period
t = number of time periods

Bond Calculator

years months
Amount Received When Loan Starts: $55,839.48
Total Interest: $44,160.52
Formula:
Present Value = Face Value / (1 + r)^t
Where:
r = interest rate per period
t = number of time periods
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A loan is a financial agreement where a lender provides funds to a borrower, who agrees to repay the amount (known as the principal) over time, usually with interest. Loans typically fall into three main categories:

1. Amortized Loans – Fixed Installments Over Time

Amortized loans require borrowers to make regular payments that gradually cover both the interest and the principal. These payments are spread evenly throughout the loan term until the debt is fully repaid. This is the most common type of loan for individuals and includes:

  • Home Loans (Mortgages)

  • Auto Loans

  • Student Loans

  • Personal Loans

When people refer to loans in everyday conversations, they’re often talking about amortized loans. If you’re looking to estimate payments or compare rates, you might find these calculators more specific and helpful:

2. Deferred Payment Loans – One Lump Sum at the End

These loans are designed to be paid off in full at maturity, with one large payment that includes all principal and interest. They are common for short-term borrowing or certain business loans. While some may involve small interim payments, the main repayment happens all at once at the end. A balloon loan is an example that can combine smaller regular payments with a final large payment.

3. Bonds – Fixed Amount Paid at Maturity

Bonds function differently from typical loans. Instead of multiple payments, the borrower repays a predetermined lump sum, known as the face value or par value, when the bond reaches maturity. Bonds come in two primary types:

  • Coupon Bonds: Provide periodic interest payments based on a percentage of the bond’s face value, usually paid annually or semi-annually.

  • Zero-Coupon Bonds: Sold at a discount and repay the full face value at maturity, with no periodic interest payments.

Though bond prices can fluctuate due to interest rates and market conditions, the amount received at maturity remains fixed. The calculator above is suited for computing values of zero-coupon bonds.

Understanding Key Loan Concepts

Interest Rates

Interest is the cost of borrowing, expressed as a percentage of the loan amount. The Annual Percentage Rate (APR) includes both interest and any additional fees, making it a more accurate measure of total loan cost. Don’t confuse APR with APY (Annual Percentage Yield), which is used for savings and investments. To estimate your interest payments, use our [Interest Calculator], or visit the [APR Calculator] for more detailed calculations.

Compounding Frequency

Compound interest is calculated not just on the initial loan amount but also on the accumulated interest. More frequent compounding means more total interest paid. Most loans use monthly compounding. To learn more or run compound interest scenarios, try our [Compound Interest Calculator].

Loan Term

The loan term is the total time over which the borrower agrees to repay the loan. Longer terms usually result in lower monthly payments but more total interest paid. Choosing the right loan term can impact both your monthly budget and overall cost.

Consumer Loans: Secured vs. Unsecured

Secured Loans

A secured loan is backed by collateral—an asset that the lender can claim if the borrower defaults. Examples include:

  • Mortgages (secured by property)

  • Car Loans (secured by the vehicle)

If the loan isn’t repaid, the lender can seize the asset (foreclosure or repossession). Secured loans often offer better interest rates and higher borrowing limits because they carry less risk for lenders.

Unsecured Loans

Unsecured loans don’t require any collateral. Lenders assess creditworthiness using the Five C’s of Credit:

  1. Character – Credit history, employment, and reputation

  2. Capacity – Debt-to-income ratio

  3. Capital – Other financial assets

  4. Collateral – Not required for unsecured loans, but used in credit evaluation

  5. Conditions – Economic environment and loan purpose

Because there’s no asset to back the loan, unsecured loans usually have higher interest rates, lower limits, and shorter terms. Lenders may require a co-signer if the borrower’s credit is limited or risky.

Common unsecured loans include:

  • Credit Cards

  • Personal Loans

  • Student Loans

Use our Credit Card Calculator, Personal Loan Calculator, or Student Loan Calculator to explore payment options and total cost estimates for each.

This Loan Calculator and its related tools can help you understand different loan types, compare borrowing options, and make informed financial decisions. Whether you’re planning a major purchase or consolidating debt, choosing the right type of loan can make a big difference in your financial health.

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