Why should you calculate loans on your own? You’ll learn a lot about what you’re getting into. When you calculate loan payments, costs, and payoff schedules, you understand how much it really costs to borrow. You can change the ingredients of the loan calculations and run ‘what if’ scenarios.

### Calculate Loan Payments

A common first step is to calculate loan payments. It’s important to know how much you’ll need to come up with each month (or quarter, or other period). To calculate loan payments, you’ll need to know a few things about your loan: the loan amount, interest rate, and length of repayment. Play with the numbers as you calculate loan payments to see how changing one of the ingredients changes the outcome.

- Monthly Payment Calculator (to calculate loan payment and see amortization table)
- Loan Payment Calculation Formula (to calculate loan payments manually)

### Calculate Loan Costs

When you borrow money, you pay interest and/or fees. If it’s not clear what the costs are, you can calculate loan costs on your own. The loan with the lowest interest rate, fee, or APR is not always the best one. Use those numbers along with an understanding of how you’ll use the loan to pick the best one. A rule of thumb is that high transaction fees do less damage for loans that last a long time.

### How to Calculate Loan Payoff

Unless you have an interest only loan, you’ll pay off your loan a gradually with each payment. That payoff process is called amortization. You should calculate loan amortization to see how much you’ll pay off after a given amount of time. It may surprise you to see that your first few payments are mostly applied to interest - they barely reduce your loan balance.

### Using Spreadsheets to Calculate Loans

If you really want to work with the nuts and bolts, you can calculate loan components with a spreadsheet. This allows you to easily run ‘what if’ scenarios by changing only one cell of the spreadsheet. The pages below are designed to calculate loans like mortgages, but you can customize and adjust for other loan types as well.