A loan calculator is a tool that helps you estimate your monthly loan payments based on the principal amount, interest rate, and term (duration of the loan). It also helps you understand the total amount you’ll pay over the loan’s life, including interest.

• Loan amount (principal): The initial amount of money you are borrowing.
• Interest rate: The annual percentage rate (APR) your lender charges.
• Loan term: The duration of the loan, typically in months or years.

Amortization is the gradual repayment of a loan over time through regular payments. With a fixed-rate loan, payments remain constant, but the portion going to interest decreases as the loan balance is paid down, while the principal portion increases.

A longer term results in lower monthly payments but higher total interest paid over the life of the loan. A shorter term means higher monthly payments but less interest paid overall.

Interest rates are influenced by factors such as:

• Credit score: Higher scores usually lead to better rates.
• Loan type: Mortgages, auto loans, and personal loans each have different typical rates.
• Loan term: Shorter terms generally have lower rates.