How is a loan payment calculated?
This calculator uses the annuity formula, where the monthly payment remains the same throughout the loan term. Formula: M = P × r × (1+r)^n / ((1+r)^n – 1), where P is the loan amount, r is the monthly interest rate, and n is the total number of months.
What is the loan payment formula?
The annuity formula calculates an equal monthly payment. Monthly interest rate r = annual rate / 12 / 100. Total months n = years × 12. For example, a €100,000 loan at 4% annual rate for 25 years: r = 0.00333, n = 300, monthly payment = €527.84.
Types of loans
Common loan types include mortgages with fixed or variable interest rates, consumer loans, car leasing, and personal loans. Interest rates typically depend on market rates (such as EURIBOR) plus the lender's margin.
Annuity vs linear repayment — what is the difference?
The annuity method means equal monthly payments throughout the term — at the beginning, a larger portion goes to interest, while at the end, more goes toward repaying the principal. The linear method means equal principal portions each month, resulting in higher initial payments but lower total interest.
Loan calculation examples
Mortgage: €150,000 at 3.5% annual rate for 30 years. Monthly payment: €673.57. Total paid: €242,485. Total interest: €92,485.
Consumer loan: €10,000 at 8% annual rate for 5 years. Monthly payment: €202.76. Total paid: €12,166. Total interest: €2,166.
How to reduce the cost of a loan?
You can reduce loan costs by choosing a shorter term (less interest), making a larger down payment, comparing offers from multiple lenders, or refinancing an existing loan at better terms. Consider not just the interest rate but also additional loan fees and charges.
Who benefits from this loan calculator?
This calculator helps you plan your budget before taking a loan. You can compare different loan terms and interest rates to find the optimal option. The amortization table shows how the ratio of interest to principal changes each month.