# Loan Calculators

Use these loan payment calculators to work out repayment figures for personal loans, student loans or any other type of credit agreement. The first calculator breaks down monthly repayments for a secured or unsecured loan. The second calculator helps you work out how long it will take to pay off your loan.

#### Disclaimer

Whilst every effort has been made in building these loan payment calculators, we are not to be held liable for any special, incidental, indirect or consequential damages or monetary losses of any kind arising out of or in connection with the use of the calculator tools and information derived from the web site. These tools are here purely as a service to you, please use them at your own risk.

The calculations given by the loan payment calculators are only a guide. Please speak to an independent financial advisor for professional guidance. Read the full disclaimer.

## Loan repayments - FAQ

### What is a secured loan?

A **secured loan** is a loan in which the borrower pledges an asset (e.g. a car or property) as collateral for the loan. Due to the fact that you are
borrowing money against an asset you own, the interest rates tend to be a lot lower than with unsecured loans. That said, the risks can be higher due to the
fact that your asset can be repossessed if you do not keep up the repayments. Secured loans are normally used to borrow large sums of money. Some examples
include home equity, mortgages and auto loans.

### What is an unsecured loan?

An **unsecured loan** is a monetary loan that is not secured against the borrower's assets. Unsecured loans often take the form of credit card debt, personal loans,
bank overdrafts, credit facilities or corporate bonds. You can learn more about unsecured loans in this article from Investopedia.

### What is a balloon payment?

A balloon payment is a large, lump-sum payment made at the end of a long-term loan. It is commonly used in car finance loans as a way of reducing monthly repayment figures. Be aware that once you reach the end of your loan period, that balloon amount becomes payable. More information about balloon payments is available in our article, What is a balloon payment?

### What is the effective annual rate?

The effective annual rate is the yearly interest rate that you actually pay on a loan due to the effect of compounding. This loan calculator compounds interest on a monthly basis.

### What is APR?

APR stands for Annual Percentage Rate and is an important factor in determining the overall cost of a loan. You can use APR to compare different
personal loan offers. When you arrange a loan with a finance company, their offer can include **extra fees** associated with the loan. The APR figure
takes that information into account, giving you a simple percentage interest rate to allow you to compare and shop around.

In addition to this, the APR figure also takes into account for the compounding of the interest rate over the year (as with 'Effective Annual Rate' shown above).

For information on interest rates and APR, see our article What is APR?

### Why is the repayment interest % different to the APR?

The pie chart displays the total interest as a percentage of the total amount paid back. The APR or Effective Annual Rate represents the yearly interest rate.

## Loan calculator formula

The loan calculator above uses the following formula to calculate repayment figures:

**Monthly payment = [ r + r / ( (1+r) ^ months -1) ] x principal loan amount**

Where: r = decimal rate / 12.

**Example**:

For repaying a loan of $1000 at 5% interest for 12 months, the equation would be:

Monthly payment = [ (0.05 / 12) + (0.05 / 12) / ( (1+ (0.05 / 12)) ^ 12 -1) ] x principal loan amount

Monthly payment = [ 0.0041666667 + 0.0041666667 / (1.0041666667 ^ 12 - 1)] x 1000.

Monthly payment = [ 0.0041666667 + 0.0041666667 / (1.0511618983 - 1)] x 1000.

Monthly payment = [ 0.0041666667 + 0.0041666667 / 0.0511618983] x 1000.

Monthly payment = [ 0.0041666667 + 0.081440816] x 1000.

Monthly payment = 0.085607483 x 1000.

Monthly payment = $85.607483.

If you have any problems using my loan calculator tool, or any suggestions, please contact me.