| Loan #1 | Loan #2 | Difference | |
|---|---|---|---|
| Loan Amount |
$
|
$
|
-- |
| Interest Rate |
%
|
%
|
-- |
| Term |
yr
|
yr
|
-- |
| Payment |
$
mo
|
$
mo
|
-- |
| Total: | |||
| Interest Paid | -- | -- | -- |
| Amount Paid | -- | -- | -- |
Amortization Schedule
| Show | |
| Payment | Total Paid | |||||
|---|---|---|---|---|---|---|
| Period | Amount | Interest | Principal | Interest | Principal | Balance |
Neither loan is complete.
The amortization table will show when at least one loan is complete.
Amortization Notes
- Payments are rounded up to the nearest cent (since people can't write checks in fractional pennies). This payment rounding typically results in slightly lower total interest payments than the main loan calculator shows. This is also the reason the final payment is typically a little less than the rest of the payments (there's slightly less accumulated interest over the course of the loan due to rounded up payments).
How To:
- Analyze a credit card balance...
- Select "Calc Term" from the button's popup menu (the "up" arrow).
- Enter the current credit card balance in "Loan Amount".
- Enter the card's current interest rate in "Interest Rate".
(check your statement or call your credit card provider if necessary) - Enter the amount you can pay each month in "Payment".
- Press the "Calc Term" button.
- The loan's "Term" field now reflects how long it will take
to pay off the credit card with the specified payment amount and interest rate.
(assuming no additional fees are incurred and no payments are missed) - Repeat steps 4 & 5 to experiment with different payment amounts.
Suggestion: Setup Loan #2 with the same "Loan Amount" and "Payment" but change the "Interest Rate" to see how a different interest rate affects when the credit card can be paid off. - Determine the effect of paying extra with each payment...
- Enter the same "Loan Amount", "Interest Rate", and "Term" for both Loans.
- Press the "Calc Payment" button.
- Select "Calc Term" from the button's popup menu (the "up" arrow)
- Add the extra payment amount to Loan #2's "Payment".
For example, if the original "Payment" was $500 and you want to pay an extra $25 each payment, then enter $525 for Loan #2's "Payment"
- Press the "Calc Term" button.
- Loan #2's "Term" now reflects the shortened "Term" as a result of the extra payments.
- Repeat steps 4 & 5 as often as you like to see how different payment amounts affect the loan's duration (aka "Term").
- Analyze an existing loan...
- Set any 3 of the 4 values (identically for Loan #1 & Loan #2)
and compute the 4th value.
When setting values:- Loan Amount = Remaining Balance
- Term = Remaining Term
- You can now analyze the loan as if it were taken out today.
- Change values for Loan #2 to see how the changes compare to your current loan.
Don't worry if calculated values differ slightly from your actual loan. Slight differences in compounding algorithms and rounding is the likely cause.
If computed values differ significantly from your existing loan, double check that you entered the correct values for the other fields. - Set any 3 of the 4 values (identically for Loan #1 & Loan #2)
and compute the 4th value.
- Determine how big a loan you can take on...
- Select "Calc Loan Amount" from the button's popup menu (the "up" arrow).
- Enter the "Interest Rate", "Term", & "Payment" for one or both loans.
- Press the "Calc Loan Amount" button.
- The "Loan Amount" field will now reflect the calculated loan amount.
- To try different scenarios adjust the "Payment", "Interest Rate", or "Term" and press "Calc Loan Amount" again.
Mortgage Payments... see the "Mortgage Payments" section below to help determine total mortgage payments. Escrow payments (not included above) can add significantly to total mortgage payments!
Mortgage Payments
Mortgage payments include escrow payments which are intended to cover property taxes and insurance. Escrow payments can add significantly to a borrower's total "Payment" amount.
Escrow payments are NOT reflected in the simple principal and interest calculations above.
To "rough guess" your escrow & mortgage payments...
Add the estimated annual property taxes to your estimated
annual insurance costs and divide by 12 for monthly payments.
For example... if property taxes are $5000/year and your total insurance costs are $3000/year then your estimated escrow liability is $8000/year. Dividing $8000 by 12 results in an escrow payment of $667/month.
| Property Taxes |
Insurance Costs |
Escrow Payment |
|||
|---|---|---|---|---|---|
| Loan #1 | $ yr | + | $ yr | = |
$
mo
|
| Loan #2 | $ yr | + | $ yr | = |
$
mo
|
| Difference | -- | + | -- | = | -- |
Add your "Escrow Payment" to
the simple principal and interest (PI) "Payment" to estimate your total
mortgage payment (computed automatically below).
| PI Payment |
Escrow Payment |
Mortgage Payment |
|||
|---|---|---|---|---|---|
| Loan #1 | $ mo | + | $ mo | = | $ mo |
| Loan #2 | $ mo | + | $ mo | = | $ mo |
| Difference | -- | + | -- | = | -- |
Notes:
- Escrow payments typically change every year (even with fixed rate mortgages) to account for changes in property taxes, insurance, and a surplus or deficit from the previous year's escrow payments.
- Home buyers are typically required to pay the first year's estimated escrow upfront plus an additional two months of escrow payments as a buffer.
Notes:
- This loan calculator uses continuous compounding algorithms in all its calculations. Continuous compounding is sort of a worst-case compounding scenario and may result in slightly higher payments and interest than other loan calculators that use simple period based (ie. monthly) compounding.
- Any compounding that is more frequent than once a year results in an effective interest
rate that is higher than the nominal annual interest rate. The nominal rate is often the rate borrowers
are quoted when obtaining a loan.
The effective interest rate from continuous compounding is provided below:
Nominal
RateEffective
RateTry It %%Loan #1 %%Loan #2 %% - This loan calculator rounds many values to the nearest dollar for display purposes. In most cases the full fractional number is preserved internally for computational purposes.