Taking out a loan is not always as simple a process as it may seem. To avoid excess debt accumulation and other potential complications that come with late repayment, it’s essential to look at your overall financial well-being when determining the right loan for you.

CreditNinja wants to help your financial dreams become reality, so we’ve constructed a simple loan calculator to help determine what your loan may look like and how your payments could be structured.

Understanding your loan’s terms is important and may impact whether you ultimately want to borrow money. Extra insight into your overall financial health will allow you to stay ahead of the curve by properly analyzing all of the elements included in taking out a loan.

To use our simplified loan calculator, fill in the data in the calculator below. Type in the principal of your loan, interest rate, loan term, and click on the ‘calculate’ button.

Payment Plan

Your payment plan:
Total Loan Amount:
Total Interest:
Number of Payments:

General Info about Loans

Loans are an essential tool to help borrowers take large or small financial actions, such as catching up on bills, making car payments, or creating a little bit of financial wiggle room. Loan qualification is typically determined by both the borrower’s income and their perceived ability to repay.

To help better explain what our simple loan calculator does and how it establishes monthly payments, we break the payments down into two different crucial components – “principal” and “interest.”

Loan interest

Do you ever wonder how lenders are able to offer loans?  The answer is by charging interest and through other fees.  Think of interest as a particular service fee paid by borrowers to cover costs associated with loans.

Payments made by the borrower are comprised of two parts. The first part of the payment is allocated towards the actual balance, or, “principal.”  The second portion is allocated to the fees for service or the “interest.”   

While paying interest to borrow money is necessary, the underlying costs of interest aren’t always obvious.

For example, imagine you are paying off an installment loan. With installment loans, interest is accounted for in your monthly payment. Each payment includes a certain amount of both principal and interest.

The annual percentage rate (APR) will tell you what percentage in total over the principal you pay per year. It includes additional costs beyond the interest charges.

The raw interest cost is essentially an interest ‘rate’, whereas the APR includes additional fees. Some loans will require you to pay closing or finance costs, which aren’t technically included in your interest rate.  

Loan Principal

To put it simply, the Principal of a loan is the raw dollar amount you are borrowing.

While determining the principal is simple, deciding the amount you can realistically afford to pay back can be a little trickier. Determining the amount of principal you can comfortably borrow should entail taking the time to analyze your entire financial situation as well as advanced planning for any unforeseen expenses.

Payments are generally allocated first to cover the accrued interest charges, and then shifted to paying off your principal.  By reducing the principal, the interest charges will begin to decrease each month.

Loan term

How long would you like to repay your loan? 

A 5-year loan isn’t the same as a 15-year loan. 

While shorter loan terms do mean each payment is larger, they also mean less interest overall will be paid. Longer terms will lower the amount of money you pay per month but will come with a larger amount of overall interest paid over the entire life-span of your loan.

Repayment schedule

A repayment schedule is the frequency of your payments. Repayment can occur weekly, bi-weekly, or monthly, depending on your budget and the terms of your loan. 

Frequent payments typically carry less interest, so a weekly repayment schedule can save you some money. However, committing to a weekly payment may not work for your budget, so understanding the full scope of all of your financial obligations is important.

Repayment amount

When processing payments, typically first the interest and any fees owed are repaid and then the principal.

Interest is directly correlated to the principal of the loan, and it’s important to know how much of your payment is allocated to the interest and how much is allocated to the principal of the loan. 

CreditNinja’s Simple Loan Calculator can help you estimate all of your payments quickly and with ease. Please visit our Debt Repayment Calculator, Credit Score Simulator, and Amortization Calculator for more information and how to calculate your loan payments now.