Frequently Asked Questions
How is a monthly loan payment calculated?
Monthly payment = P × [r(1+r)^n] / [(1+r)^n - 1]. P = principal, r = monthly rate (annual/12), n = total payments.
What is an amortization schedule?
A table showing each payment split into principal and interest. Early payments are mostly interest; later ones shift toward principal.
How does interest rate affect monthly payments?
Even 1% matters a lot. On $300k/30yr: 6% vs 7% = ~$200/mo more and ~$70k more total interest.
Should I choose a 15-year or 30-year loan?
15-year has higher payments but saves huge on interest. 30-year offers flexibility to make extra payments when you can.
Can I pay off my loan early?
Most loans allow early payoff. Extra payments toward principal reduce total interest and shorten the term significantly.
What is the difference between APR and interest rate?
Interest rate is borrowing cost. APR includes rate plus fees (origination, closing), giving a fuller cost picture.
How much goes to interest vs principal?
Early years: mostly interest. As balance drops, more goes to principal. Extra payments early save the most.
Does this work for different loan types?
Yes — mortgages, auto loans, personal loans, student loans. Any fixed-rate installment loan with known amount, rate, and term.