Loan Calculator

This Simple Loan Calculator is useful for calculating periodical installments, whether monthly, quarterly, semi-annually or annually.

About Loan Calculator

The formula for calculating the loan amount is –

About Loan

[PR(1+R)^N]/[(1+R)^N-1]

  • P is the loan amount
  • R is the rate of interest per annum
  • N is the number of period or frequency wherein loan amount is to be paid

Wherein,

  • P is the loan amountR is the rate of interest per annumN is the number of periods or frequency wherein the loan amount is to be paid

This considers the initial amount, the principal, or the loan amount and compounds the interest rate depending upon the repayment frequency. This calculator shall allow comparing loans across maturities, and the user would be able to calculate what extra loan amount will be the outgo in the form of interest. This simple calculator is useful for computing installments for any product, whether personal loans or educational loans.

How to Calculate the Loan Calculator?

Loan Calculator Examples

Example #1

Mr. Vince wants to purchase a luxury Hyundai car that will cost him around $35,000. He enquired in the showroom, and luckily, the showroom had tied with a bank that provides instant loans for creditworthy customers. On inquiry with the banker, he was told that as per his credit score, he is eligible for a 90% loan, and the rest has to be paid upfront as a down paymentDown PaymentDown payment is the initial deposit made by the buyer to the seller when purchasing an expensive item, such as residential property or a car. It comprises a portion of the total purchase amount of the asset and takes place via cash, bank check, credit card, or online banking. read more. He agreed to the same, and further, he was told that the interest rate would be 11%, and the maximum tenure he can avail for is five years and has to be repaid monthly.

  • Calculate the down payment, if any, and deduct the same from the total value of the thing for which the loan is taken, which shall provide the loan amount or, in other words, is the principal amount: Multiply the principal by the rate of interest applicable to the loan product. Now, we need to compound the same by rate until the loan period. We now need to discount the above result obtained in step 3 by the following: After entering the above formula in excel, we shall obtain installments periodically for the loan in question.

You are required to Calculate the installment amount on the loan that Mr. Vince is required to pay.

Solution:

We need to calculate the EMI amount; the number of installments is five years, but since it is monthly outgo, the number of payments required to be paid is 12*5, which is 60 equal monthly installments. Lastly, the interest rate is 11.00% fixed, which shall be calculated monthly at 11.00%/12, which is 0.92%.

  • Upfront Down-payment Calculation:

Loan Amount * (1 – loan percentage)

  • The loan amount will be

Now we shall use the below formula to Calculate the Loan amount.

Therefore, the EMI amount for this vehicle loan will be 648.89 for 5 years with monthly repayment.

Example #2

VJ has been excellent in his studies and belongs to a middle-class family. He desires to study in a college where the fees are around $21,500 for two years. His father approaches the bank, where the branch managers ask him to avail of an educational loan or he can take a personal loan. If he opts for a personal loan, he would be getting a loan amount of $18,000 with a rate of interest of 13%, and if he opts for an educational loan, he can avail of it fully at a rate of interest of 12.00%. He intends to avail of a loan for seven years. You are required to advise VJ as to which loan should be preferred.

We need to calculate the EMI amount for both products. The number of installments is seven years, but since it is monthly outgo, the number of payments required to be paid is 12*7, which is 84 equally installments. Lastly, the interest rate is 13% and 12% fixed for personal and educational loans, respectively, which shall be calculated monthly, which is 13%/12, which is 1.08%, and 12%/12, which is 1%.

  • Upfront Payment Calculation for Personal Loan:

Fees – Loan Amount

  • Personal Loan:

  • Educational Loan:

  • Total outgo in personal loan is 327.46 x 84 which is 27,506.25 – 18,000 which is 9,506.25

  • Total outgo in educational loan is 379.46 x 84 which is 31,880.84  – 21,500 which is 10,380.84

Hence, he can consider a personal loan as an outgo less than an educational loan.

Conclusion

This simple calculator, as discussed, can be used to compare loans across products and make decisions based on where the amount outgo is less. This calculator is a broader version and can be used to calculate any loan amount for any loan, whether mortgage, personal, vehicle, etc.

This has been a Guide to Loan Calculator. Here we provide the Simple loan calculator that is used to calculate repayment installments periodically for, e.g., housing loans, personal loans, vehicle loans, or educational loans. You can learn more from the following articles –

  • Auto Refinance CalculatorCalculate Auto LeaseSteps to Calculate Balloon MortgageUse Excel as a CalculatorTraditional IRA Calculator