Use this calculator to determine your monthly payments needed to pay off your loan in time. This calculator includes interest into the equation. This can be used to determine payments and total interest on student loans, home loans, or auto loans.
The following formula is used to calculate the monthly payments and total interest on a loan.
- A is the loan amount (the principal sum) or initial investment
- F is the future amount accumulated by a stream of payments
- i is the interest rate per period, not per year
- n is the number of time periods elapsed at any given point
- N is the total number of payments for the entire loan or investment
- P is the amount of each equal payment
5 Tips for Paying off Loans Quickly
Whether a car loan, student loan, or something else, almost everyone has some type of loan or debt they need to pay off. Here are some quality strategies to help pay off these loans.
1) Pay more than the minimum payment when you can afford it.
The longer you take to pay off a loan, the more you will end up paying in the end because of interest. This is especially true for loans that have high-interest rates. This leads me to tip number 2.
2) If faced with multiple loans of varying interest rates, tackle the ones with the highest interest rates first!
This one might seem pretty self-explanatory, but oftentimes companies or organizations the set up your loans don’t make it all too easy to find the interest of the individual loans or provide clear instructions on how to specifically target certain loans. It’s not exactly in their own interest to make it easy, so why would they. They want as much interest from you as possible.
3) Consolidate and Refinance
Refinancing can be a highly effective method for paying off your loans. The basics of this involve moving all of your individual loans into one new loan with fixed interest rates. This can help bring down high-interest rates loans when you do not have extra capital to pay them off quickly.
4) Take tax deductions
If you are someone with student loans, you should be eligible for student loan interest deductions on your taxes. This may reach up to $2,500.00. There are also other tax deductions you may be able to take advantage of. You should make sure to consult your accountant on all available resources.
5) Take jobs that offer forgiveness on loans.
This is likely only applicable for student loans, but certain public service works by offering loan forgiveness after so many years in the field. That is they will pay off the balance of your loans after a time period.
There are several other strategies you may use, but really, following 1 and 2 will be most effective. Pay off as much as you can as soon as you can and target high-interest rate loans. It’s simple in principle even though it may be hard in reality to let go of extra money.
Different types of Loans
– Loans that are offered to college students to cover the cost of a college education. Oftentimes these loans are cosigned by parents of the students in order to secure lower interest rates and fees. These are also typically federally funded and subsidized loans. This helps keeps interest costs down as well.
– Auto Loans are loans specifically for vehicle payments. These loans can be issued by either the car dealership that the vehicle was purchased at or by an independent bank. Typically it’s more convenient to sign a loan with a car dealership but it also carries higher interest rates. Defaulting on an auto loan could cause you to lose your car.
– Personal Loans are loans to an individual that can be almost used for anything. Interest rates are determined by credit and are often purchase to pay off debt with higher interest rates.
– Mortgages are a type of loan specifically meant for purchase houses. These loans are often long-term, anywhere from 20-40 years of payment. This is one of the most common types of loans as the cost for homes is significantly more than many people can afford at once.
– Business Loans are granted to usually small businesses and new business owners to help jumpstart a business with costs greater than the individual can afford. The larger business also takes out loans, but these are often much more complicated and only financed by other large corporations.