Use this calculator to figure out exactly how much a loan will cost you. You can plug in different values for the loan amount, interest rate, term, and closing costs to see how much each one will affect what you have to pay. You can also figure out the effective APR of a loan, which makes it easier to compare a loan with forms of credit calculated in terms of APR, such as credit cards. Costs are broken down into the total cost of the loan, the total interest, and the amount of monthly payments. So, if you want to cut down on the amount of interest you'll have to pay, you can find out exactly how much money a shorter term or lower interest rate will save you. If you are more concerned about a low monthly payment, you can see how a long a term you need to lower your monthly payment--and how much more you'll pay in interest during that longer term. Simply plug in different values for the factor you want to test-- interest, loan amount, term, or closing costs--in Loan 1, Loan 2, and Loan 3. Values for all the other factors will be filled in automatically.
Loan amount: the actual amount you are borrowing, not counting closing costs or interest.
Interest rate: the interest rate quoted on the loan. The calculator lets you specify between 1% and 18% (though you will almost certainly not get either such a low or such a high interest rate). The calculator assumes you are applying for a loan with a fixed interest rate, as almost all loans in the US have.
Term: the amount of time you will be making payments, assuming you don't make additional payments to pay down the loan earlier. The term is determined at the time you take out the loan; generally, the longer the term of the loan, the lower the monthly payments. The calculator lets you select from 1 to 30 years. (Longer than 10 years is a very long term for any loan but a mortgage.)
Down payment: amounts you will pay against the principal at closing. Mortgage lenders have traditionally required a down payment as a sign of creditworthiness, and also to provide them with a safety cushion in the event the borrower defaults.
Monthly debt payments: amount you are paying on average each month toward car loans, education loans, credit card debt, and other debt. The calculator only allows you to select a single amount for the sake of simplicity. In reality, of course, your debt may increase or decrease over time, but the lender will likely want the average amount you are paying toward debt now.
Closing costs: any costs that must either be paid before the loan is signed or that will be factored into the loan. Closing costs usually cover the costs of transacting the loan, such as costs charged by a broker. Closing costs are most commonly associated with mortgages, and often include not only broker's fees but also a down payment toward the mortgage. Note that apart from mortgages, a loan will usually not have closing costs.