How to use it
- Enter Loan amount.
- Enter Annual rate %.
- Enter Term (years).
The formula
Each payment splits into interest on the current balance plus principal.
Worked example
Early payments are mostly interest; the principal share grows every month until the balance reaches zero.
Frequently asked questions
Why is early interest so high?
Interest is charged on the outstanding balance, which is largest at the start.
Can I pay off faster?
Yes — extra principal payments shorten the schedule and cut total interest.
Tips
- Compare the total interest, not just the monthly payment.
- A larger down payment lowers both the loan and any insurance.
- Even small extra principal payments cut years off the term.
Key terms
- Principal
- The amount borrowed, before interest.
- Amortization
- Spreading repayment into equal periodic payments.
- Escrow
- Funds held for taxes and insurance.