Loan Calculator
The loan calculator helps you determine the exact monthly payment, total interest, and total amount paid for any loan.
Example: Borrow 500.000.000 at 10%/year for 5 years:
- Monthly payment: 10.623.522
- Total interest: 137.411.341
- Total amount paid: 637.411.341
The calculator uses the annuity method (equal installments), where each monthly payment is the same fixed amount, with the interest portion decreasing and the principal portion increasing over time.
Loan payment formula
Annuity formula (equal installments)
M = P × [r(1+r)^n] / [(1+r)^n − 1]
Where:
- M = monthly payment
- P = loan amount (principal)
- r = monthly interest rate (annual rate / 12)
- n = total number of months (years × 12)
Applied
Borrow 500.000.000, rate 10%/year, 5 years (60 months):
- r = 10% / 12 = 0.8333% = 0.008333
- M = 500.000.000 × [0.008333 × (1+0.008333)^60] / [(1+0.008333)^60 − 1]
- M = 10.623.522/month
Total interest and total payment
- Total paid = M × n = 10.623.522 × 60 = 637.411.341
- Total interest = Total paid − Principal = 637.411.341 − 500.000.000 = 137.411.341
Interest-to-principal ratio
Total interest / Principal × 100 = 27.5% — meaning you pay an additional 27.5% on top of the original loan amount.
First month breakdown
- Month 1 interest = 500.000.000 × 0.008333 = 4.166.667
- Month 1 principal = 10.623.522 − 4.166.667 = 6.456.856
Worked example: Car loan
| Parameter | Value |
|---|---|
| Car price | 700.000.000 |
| Down payment | 200.000.000 |
| Loan amount | 500.000.000 |
| Interest rate | 10%/year |
| Term | 5 years |
Results
| Metric | Value |
|---|---|
| Monthly payment | 10.623.522 |
| Total interest | 137.411.341 |
| Total cost (principal + interest) | 637.411.341 |
| Interest-to-principal ratio | 27.5% |
Comparing terms
| Term | Monthly payment | Total interest |
|---|---|---|
| 3 years | 16.133.594 | 80.809.369 |
| 5 years | 10.623.522 | 137.411.341 |
| 7 years | 8.300.592 | 197.249.729 |
Frequently asked questions
What is the difference between annuity and equal principal repayment?
Annuity: same monthly payment throughout, interest decreases while principal increases. Equal principal: same principal each month plus interest on remaining balance → payments decrease over time. Annuity is more common at banks.
What is 10%/year interest rate as a monthly rate?
Monthly rate = 10% / 12 = 0.8333%. Due to compounding, the effective annual rate (EAR) = (1 + 0.008333)^12 − 1 = 10.47%, slightly higher than 10%.
Should I choose a longer or shorter loan term?
Shorter term: higher monthly payment but less total interest. Longer term: lower monthly payment but more total interest. Choose a term where the monthly payment does not exceed 30-40% of your monthly income.
Does prepaying a loan save interest?
Yes. Prepayment reduces the outstanding principal → reduces interest in subsequent months. Some banks charge a prepayment penalty of 1-3% of the prepaid amount.
How to calculate maximum loan amount I can afford?
Banks typically cap monthly payments at 30-40% of monthly income. If income is $3,000/month, max payment is $1,200. Then work backward to find the max loan based on rate and term.
What is the difference between fixed and variable interest rates?
Fixed rate: stays the same for the entire term → predictable payments. Variable rate: adjusts with market conditions (usually every 6-12 months) → payments change. Fixed is safer; variable may start lower but carries risk of rate increases.