Short Guide to How a Loan Calculator Works
Short Guide to How a Loan Calculator Works

Loan Calculator

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Simple Loan Calculator

Wrong format, 1-3 digits only

Wrong format

This loan calculator can be used for informational purposes only. The data generated by the calculator are not an offer from 1F Cash Advance.

Your estimated monthly payment

Total principal paid

Total interest paid

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Start date
Estimated payoff date

The loan calculator helps borrowers calculate amortized loans. These are loans that are paid off in regular installments over time, with fixed payments covering both the principal amount and interest.

How to Use a Simple Loan Payment Calculator?

There can be different reasons for taking out a loan. Sometimes we need additional financing to cover our daily needs, go on vacation, or beat financial problems. In other cases, loans are our only option for buying a car or purchasing a new home.

There are now many lenders and plenty of offers, which makes it difficult to choose the right product. And that’s the moment when a financing calculator can answer the question, “What loan is better for me?”

simple loan payment

A loan calculator was created to help you determine your approximate monthly payments relying on your loan amount, loan term, and interest rate. Using a loan payment calculator is one of the best ways of making a good financial decision. You can use our simple payment calculator for free but first, let’s find out how it works. 

A simple loan calculator allows you to calculate an amortized loan. Such a cash advance has a fixed interest rate and fixed loan payments, which are paid in equal installments within a loan lifetime.

The monthly payment for an amortized loan covers both monthly principal and interest payments. In two words, it can help you determine the amount of your monthly payments for most common loan types, for example, student loans, personal loans, auto loans, mortgages, etc.

With the help of a simple loan calculator, you can compare several loans and get an idea of how much you can borrow based on the amount you can afford to pay each month. After calculating a loan, you will see an estimated monthly payment amount and the loan amortization schedule, which separately shows you the amount of principal and interest rate you will have to pay on a monthly basis.

This knowledge allows you to estimate the total cost of your loan and total interest paid to understand how the loan you consider suits your budget.

A loan calculator is usually easy to use. All you need to get an idea of what the amount of your monthly loan payments will be is to enter some of your loan details, such as a loan amount, loan term, and interest rate, in the appropriate fields and click “Calculate.”

What Factors Determine The Interest Rate on a Loan?

An annual percentage rate for a personal loan always affects your monthly payments, as well as a loan term. That is why we should understand what can influence your interest rates to choose the right option among all the loan offers.

Basically, an average interest rate for a personal loan ranges from 4.99% to 32% APR. However, you may borrow money at lower interest rates if you have a good credit score or take out a loan at higher interest rates if your credit history is bad. Thus, the lower your credit score, the more the interest rate you can get from a lender.

Although traditional lenders always check your credit report through main credit bureaus, your credit score is not the only determining factor. There are other factors that can also affect your loan interest rates. For example, the amount of the down payment (for auto loans or mortgages), as well as your debt-to-income ratio, also plays a role when it comes to an interest rate.

Also, if you provide the lender with collateral backing, it may give you a higher amount for flexible loan terms and at a lower interest rate. It happens because collateral acts like a guarantee in case of defaults and missing payments.

What Loan Should I Choose: Secured Loans vs. Unsecured Loans

secured Loans vs. unsecured Loans

Unsecured loans are also known as signature loans. It means that your signature is enough to get it. Although an unsecured loan doesn’t require any pledge and doesn’t carry the risk of losing your property, it usually comes with higher regular payments due to higher interest rates. An unsecured loan is also harder to get with bad or no credit. 

A secured loan is a type of borrowing that requires collateral. Secured loans are riskier, so you should make sure you will be able to make your monthly payment on time to save your property. At the same time, a secured loan typically offers a low fixed interest rate that makes the amount of your loan payment more affordable. It is also one of the popular ways of borrowing money with bad credit.

However, deciding on a loan is a personal choice. Both unsecured and secured loans may suit you, depending on the situation. If you have some valuable property to use as collateral, you may consider a secured loan. But first, make sure you are aware of the risks and this option suits your budget.

What Do You Need to Know to Estimate Your Monthly Payments?

A simple loan payment calculator usually requires you to enter some common loan details. Here are three main loan basics.

  • Interest Rate The interest rate is a profit that a lender makes on a loan. This amount is paid by a borrower. When it comes to an amortized loan, it is always a fixed rate that is equally divided among the number of your monthly payments. Each monthly payment covers both principal and interest.
  • Loan Amount A loan amount is a sum you want to take out from a lender or a principal remaining on an existing loan. Lenders offer various loan amounts depending on a loan type, your income, and your credit score.
  • Loan Interest Calculator Depending on a Loan Type If you have good credit and a low debt-to-income ratio, as well as a steady income, you are most likely to be eligible for any type of loan. Meanwhile, each loan calculator may have its nuances. Here are the most popular loan types and their main features to know before calculating your credit payment.

Loan Interest Calculator Depending on a Loan Type

If you have good credit and a low debt-to-income ratio, as well as a steady income, you are most likely to be eligible for any type of loan. Meanwhile, each loan calculator may have its nuances. Here are the most popular loan types and their main features to know before calculating your credit payment.

  • Personal Loan

    Personal loans are flexible, usually unsecured lump-sum cash advances that you can use for any purpose, from home improvements to going on vacation or debt consolidation. Thus, a personal loan calculator can show you your monthly payment taking into account the loan amount, loan terms, and your FICO score.

    As personal loan lenders are always focused on your credit history, you should check it before applying to make sure you meet their minimum requirements. Also, pay attention to origination fees. Sometimes personal loans with low rates come with high additional fees that a calculator doesn’t account for.

  • Mortgage

    Mortgages typically offer you up to 90% financing, so they require a down payment. That is why, when using a mortgage calculator, you should know not only your interest and the length of the repayment period but also your home cost and the amount of a down payment you’re ready to make. That’s how you can find out how much money you need to have for a down payment to make your monthly payment affordable.

  • Student Loan student loans

    Student loans are educational loans from private lenders or the federal government. Unlike private student loans, federal loans, such as Stafford loans, Perkins loans, and PLUS loans, may offer both subsidized and unsubsidized loans at fixed low rates and with convenient payment plans.

    A student loan calculator can estimate how much total interest you will pay for a loan relying on the amount of time you will need to repay it. Consider paying a part of your loan from your college tuition to make your debt easier to repay after graduation. For example, Stafford Loans and Perkins loans have a minimum monthly payment of about $40-$50. Using a loan calculator, you can see how much money you can save by paying more than the mandatory minimum.

  • Auto Loan

    Auto loans are secured cash advances created to finance your vehicle purchase. A calculator for car loans usually shows the amount of your monthly payments based on the cost of your auto, repayment period, and annual percentage rate, which usually depends on a car year.

  • Home Equity Loan

    A home equity loan is a lump-sum cash advance repaying in fixed monthly installments from 5 to 20 years. It also may be called a second mortgage. A home equity loan calculator will show you the amount you can borrow depending on your FICO score and your LTV ratio. You can count it by subtracting the amount you owe on your home from what your home is worth.


How to Calculate Interest on a Loan?

The easiest way is to use the right loan calculator, depending on the loan type. You will see the loan amortization schedule, which shows the amount of total interest you will have to pay.

What to Consider Before Getting a Loan?

Pay attention not only to a monthly payment but also to some additional charges, such as origination fees. Sometimes the amount of fees may be very significant. Also, pay attention to your credit rating to understand whether you should choose secured or unsecured loans. Consider putting up collateral if your FICO score is poor.

How Can I Compare Different Loan Products?

There are some services that allow you to compare several loans at a time. They show some basic real-time loan criteria, so you can estimate different loans using a loan calculator.

How Can I Check My Credit Rating?

You can do it through credit reporting bureaus or use some free online services.