Simple Loan Calculator
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How to use Credit Karma’s loan payment calculator
Our loan calculator can help you understand the costs of borrowing money and how loan payments may fit into your budget. It takes into account your desired loan amount, repayment term and potential interest rate. You’ll be able to view an estimated monthly payment, as well as the amortization schedule, which provides a breakdown of the principal and interest you may pay each month.
To estimate your monthly loan payment, you’ll need the loan amount (the amount you’d like to borrow) and the loan term (or how long you have to pay back your loan and the interest rate on the loan).
Keep in mind that this loan payment calculator only gives you an estimate, based on the information you provide. Loan fees like prepayment penalty or origination fee could increase your costs or reduce the loan funds you receive.
How do you calculate a loan payment?
Before you prequalify or apply for a loan, you can use Credit Karma’s simple loan calculator to estimate your potential monthly loan payments along with the total interest paid over the life of the loan. This can give you a better idea of what you may be able to afford before starting the process of prequalifying and applying for loans. To use the calculator, you’ll just need to know how much you’re wanting to borrow, what a potential interest rate might be, how long you want to take to pay your loan off and your credit score.
What should you consider before taking out a loan?
As you estimate your payments, keep in mind that doing some planning before you apply for a loan can pay off in the long run.
Loan basics you need to know
Before applying for a loan, make sure you understand some of the basics first.
- Loan amount — How much money you’ll receive, generally in a lump sum
- Loan term — How long it will take to pay off your loan when you make your monthly payments
- Principal — The original amount of money borrowed
- Interest rate — The rate you’re charged to borrow money
- Loan payment — Generally a fixed monthly payment, made up of the principal plus interest
Set a budget
If you need or want to take out a loan, it’s a good idea to figure out how much space you have in your monthly budget. You don’t want to take on a payment that will be a struggle to make each month. Additionally, lenders may look at your debt-to-income ratio to determine whether you qualify for a loan and — if so — how much they may lend you.
Choose the right type of loan for your needs
There are several types of personal loans, but not every loan will be right for you. Here are a few common loan types.
- Student loans — Can be used for the cost of tuition and education-related expenses
- Auto loan — Financing for a new or used car
- Home equity loan — Uses your home as collateral, but the funds can be used for almost anything
- Personal loan — You can use funds for many purposes, and the loan may be secured or unsecured
Decide between secured and unsecured loans
As you’re looking at loan options, you may come across secured and unsecured loans, typically for personal loans. The main difference between these loan types is that with a secured loan, you’ll have to put up collateral to obtain your loan. Unsecured loans don’t require collateral. Secured loans often have lower interest rates than unsecured loans, but they come with a risk: You’re putting up collateral such as your car or home in exchange. That means if you default on your loan, the lender could take your property.
Compare loan offers
It’s a good idea to shop around and compare loan offers from multiple lenders. You can check your estimated rate by applying for prequalification, if possible. Getting prequalified gives you an idea of what your loan rate and loan terms could be and without a hard inquiry on your credit reports.
Just remember that if you decide to officially apply for a loan you prequalify for, your rate and terms could still change, and the lender will likely perform a hard credit inquiry, which can negatively affect your credit scores.
FAQs about loans
There isn’t an exact answer for how much you may be able to borrow with a $500 monthly payment. This is because the interest rate each person is approved for can vary and will impact how much the monthly payment will be. It also depends on how long you have to repay your loan. If you’re able to pick a longer repayment term length, you may be able to afford to borrow more — but a longer repayment term length also likely means paying more interest over the life of the loan.
It depends on your personal situation whether a 72-month loan is a good fit. The longer the repayment length is, the more interest you’ll pay over the life of the loan. But you shouldn’t choose a shorter loan length just to save on interest. Choose the loan length that gives you a monthly payment that fits into your budget.