Payment Calculator

Fixed Term vs. Fixed Payments

This calculator offers two approaches to loan calculations:

• Fixed Term: Calculate the monthly payment required to pay off a loan within a specified time period (e.g., 15 or 30 years for mortgages).
• Fixed Payments: Determine how long it will take to pay off a loan when making a specific monthly payment.

Understanding Interest Rate vs. APR

When evaluating loans, it's important to understand the difference between interest rate and Annual Percentage Rate (APR):

• Interest Rate: The basic cost of borrowing the principal loan amount.
• APR: A broader measure including the interest rate plus other costs such as broker fees, discount points, and closing costs.
• If there are no additional fees, the interest rate equals the APR.
• For large loans like mortgages, the difference can amount to thousands of dollars.

Variable vs. Fixed Interest Rates

Loans typically offer two interest rate options:

• Fixed Rate: The interest rate remains constant throughout the loan term, providing predictable payments.
• Variable Rate: The interest rate may change over time based on market indices, potentially resulting in payment fluctuations.
• Variable rates often start lower than fixed rates but carry the risk of increasing over time.

Tips for Using This Calculator

• Compare different loan terms to see how they affect total interest paid.
• Consider making extra payments to reduce the loan term and save on interest.
• Use the amortization schedule to understand how payments are applied to principal and interest over time.
• For mortgages, remember to account for property taxes and insurance which may be additional to the calculated payment.