Repayment Calculator
The Repayment Calculator can be used to find the repayment amount or length of debts, such as credit cards, mortgages, auto loans, and personal loans. It can be utilized for both ongoing debts and new loans.
Modify the values and click the Calculate button to use
What is a Repayment Calculator?
A repayment calculator is a financial tool that helps you determine how much you need to pay regularly to fully repay a loan within a specified time period or how long it will take to repay a debt with fixed payments. It considers factors such as the loan amount, interest rate, repayment frequency, and compounding method.
Loan Repayment Formula
The calculation for loan payments with compound interest typically uses the following formula:
For fixed-time repayment (finding the payment amount):
$$PMT = \frac{P \times r(1+r)^n}{(1+r)^n-1}$$
For fixed-installment repayment (finding the time required):
$$n = \frac{\log(\frac{i}{i-Pr})}{\log(1+r)}$$
Where:
- PMT = Payment amount
- P = Principal (loan amount)
- r = Periodic interest rate (annual rate divided by payment periods per year)
- n = Total number of payment periods
- i = Fixed installment amount
How to Use This Calculator
1. Enter your loan balance (the amount you need to repay).
2. Input the interest rate (annual percentage rate).
3. Select how the interest compounds (monthly, quarterly, or annually).
4. Choose how often you want to make payments.
5. Select whether you want to:
• Repay within a fixed time (you specify the duration)
• Repay with a fixed installment amount (to find out how long it will take)
6. Click the Calculate button to see your results.
7. View the detailed amortization table to see how each payment is applied.
Important Notes
- • This calculator assumes a fixed interest rate throughout the loan term.
- • Early or additional payments are not factored into the initial calculation but can be explored in the amortization table.
- • For loans with variable interest rates, this calculator provides an estimate based on the current rate.
- • Results are rounded to the nearest cent for practical use.
Applications of Repayment Calculations
1. Mortgage Loans: Determine monthly payments for home loans.
2. Auto Loans: Calculate car loan payments and total interest.
3. Credit Card Debt: Figure out how long it will take to pay off with fixed payments.
4. Personal Loans: Plan repayment strategies and compare options.
5. Business Loans: Manage cash flow by understanding repayment obligations.
Frequently Asked Questions
What happens if I make extra payments?
Making extra payments reduces your principal balance faster, which decreases the total interest paid and shortens the loan term.
How does the repayment frequency affect my total interest?
More frequent payments (monthly versus quarterly or annually) generally result in less total interest paid over the life of the loan.
Why are my first payments mostly interest?
In amortizing loans, interest is calculated on the remaining balance. Since the balance is highest at the beginning, more of your payment goes toward interest initially.
How accurate is this calculator?
This calculator provides a good estimate for standard amortizing loans with fixed interest rates. For complex loan structures or variable rates, consult with a financial advisor.