A loan is an agreement where a lender gives a borrower money (the principal) to be repaid later, usually with interest. Loans can vary widely, but two key factors are the loan term and the monthly payment, which you can compare using the calculator above.

Fixed Term Loans

Loans like mortgages and auto loans are typically paid over a set time period. Choosing between shorter or longer terms affects both monthly payments and total interest paid.

• Shorter terms: Higher payments but lower total cost and interest.

• Longer terms: Lower payments but higher total cost.

You can experiment with the calculator to find what fits your budget. For detailed calculations, try the Mortgage or Auto Loan Calculator.

Fixed Monthly Payment Loans

This option helps you see how long it’ll take to pay off a loan with a fixed payment — useful for credit cards or when adding extra payments.
If results show you can’t pay off the principal and interest, try lowering the loan amount, raising the payment, or finding a lower interest rate.

Interest Rate vs. APR

The interest rate is the cost of borrowing money.
The APR (Annual Percentage Rate) includes fees like closing costs and broker fees, giving a truer picture of a loan’s cost.
If there are no extra fees, APR and interest rate are the same. Use APR for the total cost, and interest rate for pure borrowing cost.

Variable vs. Fixed Rates

• Fixed rates stay the same for the entire loan.

• Variable rates change with market indexes (like the U.S. Federal Reserve rate or Libor). Payments may fluctuate as rates rise or fall.

Some lenders cap how high variable rates can go. Variable loans can be good when rates are dropping, but risky when they rise.

Credit cards can have either rate type, and borrowers with good credit can often negotiate better terms. For credit card payoff planning, use the Credit Card or Credit Card Payoff Calculator.