This calculator helps you estimate your regular payment amount for a loan, such as a mortgage, auto loan, or personal loan. Knowing your estimated payment is crucial for budgeting, financial planning, and comparing different loan offers. The calculation is based on the principal loan amount, the annual interest rate, and the loan term (duration).
How the Calculation Works:
The formula used is the standard annuity payment formula, which determines the fixed periodic payment required to amortize a loan over a set period. The formula is as follows:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total estimated monthly payment.
P = The principal loan amount (the total amount of money borrowed).
i = Your monthly interest rate. This is calculated by dividing the annual interest rate by 12 (e.g., if your annual rate is 6%, then i = 0.06 / 12 = 0.005).
n = The total number of payments over the loan's lifetime. This is calculated by multiplying the loan term in years by 12 (e.g., for a 30-year loan, n = 30 * 12 = 360).
Our calculator takes your inputs for Loan Amount (P), Annual Interest Rate, and Loan Term (in years), converts them into the monthly figures (i and n), and then applies this formula to present your estimated monthly payment (M).
Key Terms Explained:
Loan Amount (Principal): The initial sum of money you borrow.
Annual Interest Rate: The yearly percentage charged by the lender for borrowing money. This is usually expressed as a percentage.
Loan Term: The total duration of the loan, typically expressed in years. It determines how long you have to repay the principal and interest.
Monthly Interest Rate: The interest rate applied each month, derived from the annual rate.
Total Number of Payments: The total count of payments you will make throughout the loan's life.
Estimated Monthly Payment: The fixed amount you are expected to pay each month to cover both the principal and interest, and fully repay the loan by the end of its term.
Use Cases:
Mortgage Planning: Estimate your monthly mortgage payments to understand affordability and compare different home loan options.
Auto Loan Estimation: Get an idea of how much your car payments might be based on the vehicle price, interest rate, and loan duration.
Personal Loan Assessment: Gauge the monthly burden of personal loans for various needs like debt consolidation or large purchases.
Budgeting and Financial Planning: Incorporate estimated loan payments into your monthly budget to manage your finances effectively.
Please note that this calculator provides an *estimate*. Actual loan payments may vary due to factors such as lender fees, escrow costs (for mortgages), specific loan product terms, or variable interest rates. Always consult with your lender for an exact payment quote.
function calculatePayment() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
var monthlyPaymentDisplay = document.getElementById("monthlyPayment");
if (isNaN(loanAmount) || loanAmount <= 0) {
alert("Please enter a valid Loan Amount greater than zero.");
resultDiv.style.display = 'none';
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
alert("Please enter a valid Annual Interest Rate (0% or greater).");
resultDiv.style.display = 'none';
return;
}
if (isNaN(loanTerm) || loanTerm <= 0) {
alert("Please enter a valid Loan Term in years greater than zero.");
resultDiv.style.display = 'none';
return;
}
var monthlyInterestRate = (annualInterestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyPayment;
if (monthlyInterestRate === 0) {
monthlyPayment = loanAmount / numberOfPayments;
} else {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
if (isNaN(monthlyPayment) || monthlyPayment === Infinity || monthlyPayment < 0) {
alert("Calculation resulted in an invalid number. Please check your inputs.");
resultDiv.style.display = 'none';
return;
}
monthlyPaymentDisplay.textContent = "$" + monthlyPayment.toFixed(2);
resultDiv.style.display = 'block';
}