Loan Calculator

Plenty of us out there like numbers--if they're printed on little green pieces of paper that we can trade in for stuff at the mall, that is. We're not so crazy about numbers when they come back at us in the mail accompanied by words like "principal" or "interest." We like them even less when we're the ones who have to crunch them to find out how much we really have to pay for that new car, home or college degree—and by when.

Fortunately, loan calculation is one of those times when it's okay to let the internet do your homework. Several websites out there have set up loan calculators, convenient little tools that do the math for you. A typical online loan calculator is a series of labeled blank fields, each to be filled in by a number that represents some aspect of your loan. For example, an auto loan calculator might contain three blank fields:

• Principal
• Interest
• Number of Years

Principal is the initial amount lent to the auto purchaser by the lender. If, for example, the car was bought for $20,000, then you would enter this amount into the field. Interest is the percentage of money owed that you pay in addition to your fixed monthly payment. If, for example, you pay 5% interest, add that number here. Finally, Number of Years is the self-explanatory part: it's the number of years you and your lender have agreed you can take to repay the loan. Imagine, then, that you and your lender have agreed that the auto loan will be repaid within 5 years. Simply type the number "5" into the Number of Years field. Double check that the information you've entered in all three fields is correct, and click on the "calculate" button. Within moments, the online calculator will do your calculations. Typically, online auto loan calculators will calculate your monthly payments for you; however, some may work out what you'll owe overall. Shop around; there are many such calculators out there. Other types of loan calculators, such as student loan calculators or mortgage loan calculators, often use a similar format.

Another type of loan calculator is a Loan Comparison Calculator. This type of loan calculator allows you to analyze how changes made to your repayment schedule will affect your monthly payments. These loan calculators will ask you for three variables: your principal payment, the interest, and the number of payments you’ve arranged to make. Type in these amounts in the corresponding fields. Then, click on the “compute” or “calculate” button. A number will pop up in a fourth field, telling you your total monthly payment each month. A fifth field will reveal the total interest you will have paid at the end of your loan. Loan Comparison loan calculators let you analyze the total amounts you’ll pay should you make changes to your loan repayment plan—if, for example, you alter the agreed-upon number of payments. These types of loan calculators come in handy for times when you’re debating extending a loan. Type in the change you’re thinking of making (for example, extending your loan repayment period to 30 months from 24) and see how much interest you’ll end up paying overall should you make this change.

Get online and search for loan calculators. There are all kinds of tools out there to help you pay back your loans.