How to use it
- Enter the loan amount after any down payment.
- Enter the rate the lender quotes and the term in months — car and personal loans are usually quoted this way.
- Try a shorter and a longer term to see how the payment and the total interest trade off.
The formula
Payment = P × i ÷ (1 − (1 + i)^−n)
The same amortisation formula banks use for fixed-rate instalment loans, with i as the monthly rate and n as the number of months.
Worked example
A car loan of 15,000 at 8.5% for 48 months.
Payment ≈ 369.72 a month.
Over 60 months instead, the payment drops to ≈ 307.75, but total interest rises from ≈ 2,746.56 to ≈ 3,465.00.
Assumptions
- Fixed rate, equal monthly payments.
- No balloon payment and no fees.
Common mistakes
- Entering the car price instead of the amount actually borrowed.
- Using a flat rate quote as if it were an annual rate.
Questions
Can I see what happens if I pay extra?
Not yet. For now, compare a shorter term: it shows the effect of paying the loan off faster.
What term should I choose?
The shortest term whose payment you can comfortably afford every month usually costs the least overall.
Estimates only. Your actual figures depend on the provider’s terms.