Reading your loan statement
You need three numbers: the current principal balance (not the original loan amount if you've been paying for a while), the APR, and either your monthly payment or the number of months you want to finish in. APR is shown on your statement or Truth in Lending disclosure.
Worked example
A $20,000 loan at 6% APR over 60 months needs a payment of about $386.66 a month. Over five years you'd pay about $23,199 in total, of which roughly $3,199 is interest. Switch to payment mode and enter a higher amount to see how quickly an extra $50 or $100 a month shortens the loan.
What APR does and doesn't capture
APR folds certain lender fees into a yearly rate so offers can be compared. This calculator applies the APR you enter as a simple monthly rate (APR ÷ 12), which matches most car and personal loans. Credit cards with daily compounding, variable rates or promotional periods will differ somewhat.
FAQ
How is a monthly loan payment calculated?
The standard formula is P × r ÷ (1 − (1 + r)^−n), where P is the principal, r is the APR divided by 12, and n is the number of months.
What happens if my payment only covers the interest?
The balance never goes down. APR Desk warns you when a payment is too low to ever pay off the loan.
Is a lower APR or a shorter term better?
Both reduce total interest. A shorter term raises the monthly payment but usually saves the most interest overall.
Can I use APR Desk for a mortgage?
Yes, for principal and interest. Property tax, insurance and PMI are not included, so your actual mortgage payment will be higher.