How to use
- Loan amount: how much you borrow. It has to be more than 0.
- Annual rate: a rate (%) that stays the same for the whole term. 0 is allowed.
- Term: two fields, years and months, up to 100 years in total. The calculator assumes one payment a month.
- Repayment method: choose “Equal payment”, “Equal principal” or “Interest-only + balloon”.
The largest figure in the results has a different name for each method. For Equal payment it’s the “Monthly payment”, for Equal principal the “First payment”, and for Interest-only + balloon the “Monthly interest”. Below it are “Total interest”, “Total paid” and “Last payment” (for Interest-only + balloon, “Balloon payment (interest + principal)”).
The “Compare repayment methods” table sets the three methods side by side for the same loan amount, annual rate and term, showing each one’s first payment and total interest, and highlights the row for the method you chose. Under “Amortization schedule” the yearly table comes first. Open “Show the monthly schedule” to see the payment, principal, interest and balance for every month.
The formula behind each repayment method
Call the loan amount P, the monthly rate i (the annual rate ÷ 12) and the term n months.
- Equal payment: you pay the same amount every month, P × i ÷ (1 − (1 + i)⁻ⁿ). Within each payment, the interest is the remaining balance × i and the rest is principal, so the principal share grows with every payment.
- Equal principal: the principal you repay each month is the same, P ÷ n. Interest of the remaining balance × i is added on top, so the payment is largest the first month and gets a little smaller every month after.
- Interest-only + balloon: you pay only the interest, P × i, each month. The last payment is that month’s interest plus the whole principal P.
Worked example
The amounts below have no currency attached. Results scale with the loan amount, so if you add three zeros to the loan amount, read the results with three more zeros as well. On screen, amounts are shown in the currency of the page’s language. A currency that doesn’t use decimals, such as the won or the yen, is rounded to a whole number (477.42 becomes 477).
These are the results for a loan amount of 100,000, an annual rate of 4% and a term of 30 years (360 payments).
| Method | First payment | Last payment | Total interest | Total paid |
|---|---|---|---|---|
| Equal payment | 477.42 | 477.42 | 71,869.51 | 171,869.51 |
| Equal principal | 611.11 | 278.70 | 60,166.67 | 160,166.67 |
| Interest-only + balloon | 333.33 | 100,333.33 | 120,000.00 | 220,000.00 |
The monthly schedule shows the difference between the three more clearly.
- With Equal payment, the first payment of 477.42 is 333.33 of interest and 144.08 of principal. The principal share doesn’t overtake the interest share until payment 153, in year 13.
- With Equal principal, you repay 277.78 of principal every month. The payment first drops below Equal payment’s 477.42 at payment 146 (476.85). Until then, Equal principal costs more each month.
- With Interest-only + balloon, you pay 333.33 of interest alone through payment 359, so the balance never goes down, and the total interest is 333.33… × 360 = 120,000.
Equal principal has the lowest total interest because it pays the principal down fastest, and the price of that is a heavier load in the early years. Don’t look at total interest alone. Check whether you can afford the first payment too.
What changes when you change the rate or the term
These results are for a loan amount of 100,000 with Equal payment, changing only the annual rate and the term.
| Annual rate | Term | Monthly payment | Total interest |
|---|---|---|---|
| 4% | 15 years | 739.69 | 33,143.83 |
| 4% | 20 years | 605.98 | 45,435.28 |
| 4% | 30 years | 477.42 | 71,869.51 |
| 5% | 30 years | 536.82 | 93,255.78 |
| 6% | 30 years | 599.55 | 115,838.19 |
Stretching the term from 15 years to 30 lowers the monthly payment by 262.27, but the total interest more than doubles. When the annual rate goes up 1 percentage point, from 4% to 5%, the monthly payment on a 30-year term rises by 59.40 and the total interest by 21,386.27.
For the same rise of 1 percentage point, total interest under Equal principal goes from 60,166.67 to 75,208.33, and under Interest-only + balloon from 120,000 to 150,000. For those two methods total interest is directly proportional to the annual rate, so it rises 25%. Under Equal payment it rises about 30%, the largest increase of the three in percentage terms.
How it calculates, and where it stops
- A month is one twelfth of a year. The monthly rate is the annual rate ÷ 12. The different lengths of the months and the date you take out the loan are not taken into account.
- Loans whose rate changes can’t be calculated. Neither can an interest-only period for the first few years, or paying off part of the principal early.
- Fees aren’t included. Origination fees, guarantee fees and prepayment penalties are not part of the total interest or the total paid.
- It doesn’t judge how much you can borrow. Borrowing limits and approval criteria differ from country to country and lender to lender, so they are left out.