A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

Loan Calculator

A loan calculator is an invaluable mortgage tool for anyone in the market for a new home. Anyone considering entering into a loan agreement should familiarize themselves with a loan calculator and try to understand a little of the math that determines how a loan is amortized.

Understanding how this repayment schedule is determined will enable you better understand your budgetary needs and sign for the best loan possible.

The Loan Payment Calculator computes an estimate of the size of your monthly loan payments and the annual salary required to manage them without too much financial difficulty. This calculator can be used with Federal education loans and most private education loans.

You should play around with some hypothetical numbers and see how shaving a year here or paying a little more there dramatically changes the loan landscape. Simply enter the principal loan amount, the number of repayment years, and the annual interest on a fixed rate interest loan.

The result is an amortization schedule that illustrates the repayment schedule for the life of your loan. It determines your set monthly payment and then illustrates how much of each payment is applied towards interest and how much is applied against principal. As the principal decreases, so does the required interest due.

This schedule breaks down the total cost of the loan what the total cost of the loan will be and how much of that is interest. You will also be able to judge loan offers more wisely and understand exactly how interest rate changes will affect your investment.

There are many online loan calculators available that can help you weigh the various alternatives on your loan and chalk out the payments accordingly.