Personal Loan & Debt Consolidation Calculator
Estimate your monthly payments for a personal loan or see how much you could save by consolidating high-interest debt into a single, lower-rate loan.
Understanding the Personal Loan Calculator
A personal loan can be a useful tool for various purposes, from consolidating high-interest debt to financing a large purchase. This calculator helps you understand the costs associated with a personal loan by estimating your monthly payment and the total interest you'll pay over the life of the loan.
How It Works
The calculator uses the standard amortization formula to determine your fixed monthly payment based on three key inputs:
- Loan Amount: The total amount of money you plan to borrow.
- Interest Rate (APR): The Annual Percentage Rate, which represents the total cost of borrowing, including interest and some fees.
- Loan Term (Years): The duration over which you will repay the loan.
The Formula
The monthly payment is calculated using the same formula as a mortgage:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where: M = Monthly Payment, P = Principal Loan Amount, i = Monthly Interest Rate, and n = Number of Payments.
The results show your estimated monthly payment, which is crucial for budgeting. It also calculates the total interest paid, highlighting the overall cost of borrowing. When using a personal loan for debt consolidation, you can compare this total interest cost to what you would have paid on your existing debts to see your potential savings.
Frequently Asked Questions
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