Loan Calculator

How to use EarnIn’s loan calculator

If you’ve been wondering how to calculate monthly loan payments, or when those payments will end, your search is over. EarnIn's loan calculator is a powerful, user-friendly tool that lets you estimate your monthly payments, the costs of taking out a loan, and the date you'll pay it off to help you make the best choices for your finances.

Before getting started, let’s review some key terms:

Loan amount. This is the total amount of money you intend to borrow from a lender for a new loan or the remaining balance you need to pay for an existing loan.
Loan term. The loan term is the length of time you agree to repay the loan, typically expressed in months or years. A longer loan term often means lower monthly payments but more interest paid over the life of the loan, while a shorter term results in higher monthly payments but less total interest.
Interest rate. The interest rate represents the cost of borrowing money, expressed as a percentage of the loan amount. It's the amount the lender charges you for using their funds. Your interest rate is usually determined by your credit score, income, and loan term.

Now that we understand the terminology, here's a step-by-step guide for using the calculator:

Enter your loan amount. Put the total amount for the loan you’re calculating in the "Loan Amount" field.
Choose your loan term. Put the loan term set by your lender or the amount of time you plan to take to pay back the loan.
Type in your interest rate. Enter the annual interest rate for your loan. If you're considering a new loan, check offers from various lenders to make an estimate. For existing loans, use your loan agreement.
Click “Calculate your payoff plan”. No need to learn how to calculate interest on a loan — after entering your loan details, just click the “Calculate your payoff plan“ button to see your results.
Review your results: The calculator will display your estimated monthly payment, the total principal and interest paid over the life of the loan, and the month and year when you’ll be debt-free (if you make all your payments on time).
Adjust your inputs (optional). If you want to explore different loan scenarios or see how extra payments could impact your loan, modify your entries and click “Calculate your payoff plan“ again to see updated results.
View payment schedule (optional). For a more detailed breakdown, click the See payment schedule link to view a table showing your monthly payments, split by principal and interest.

The loan calculator provides an estimate based on the information you provide. It doesn’t account for additional fees like origination fees or prepayment penalties, so be sure to carefully review your loan agreement for a complete understanding of the costs associated with your loan.

Secured versus unsecured loans

Before diving into the most common loan types, it's helpful to understand the difference between secured and unsecured loans since every loan falls into one of these two categories.

Secured loans require the borrower to put up an asset, such as a home or vehicle, as collateral. This protects the lender in case the borrower defaults on the loan. If the borrower fails to repay the loan as agreed, the lender has the right to seize the collateral (in this case, the home or vehicle) to recover their losses. Because secured loans present less risk to the lender, they often have lower interest rates and more favorable terms than unsecured loans. Examples of secured loans include mortgages, home equity loans, and auto loans.

Unsecured loans, on the other hand, don’t require collateral. Instead, lenders base their decisions primarily on factors like the borrower's credit score, income, and debt-to-income ratio. Because unsecured loans present more risk to the lender, they typically have higher interest rates and stricter qualification requirements than secured loans. Examples of unsecured loans include student loans and personal loans.

When deciding between a secured or unsecured loan, consider your financial needs and resources, the purpose of the loan, potential tax implications, and your comfort level with putting up collateral.

5 common types of loans

Different types of loans have varying interest rates, repayment schedules, and rules. Understanding the loan options available will help you choose a better fit for your financial needs and goals.

Five of the most common types of loans include:

Mortgages. These loans are used to purchase a home or refinance an existing home loan. They’re secured by the property itself and typically have longer repayment terms, ranging from 10 to 30 years.
Home equity loans. These loans allow homeowners to borrow against the equity they've built in their home, which is the difference between the home's current market value and the remaining mortgage balance. This might sound complicated, but it’s just using the value you own in your property as a guarantee for a loan. You can use home equity loans for various purposes, including home improvements, debt consolidation, or major expenses.
Student loans. These loans are designed to help students pay for college or graduate school and can be federal or private. Federal student loans often have lower interest rates and more flexible repayment options than student loans offered by private lenders.
Auto loans. Auto loans finance the purchase of a new or used vehicle. They’re secured by the vehicle itself and typically have repayment terms ranging from 24 to 84 months.
Personal loans. These versatile loans can be used for a variety of purposes like debt consolidation, weddings, or unexpected expenses. They tend to have more favorable interest rates than multi-purpose short-term loans, making them a great option for many situations. Personal loans can be secured or unsecured, and repayment terms typically range from 24 to 72 months.

What is the average interest rate for a loan?

Interest rates vary depending on the type of loan and the borrower's credit. Some loans have fixed rates, meaning your interest rate remains constant throughout the life of the loan which can provide predictable monthly payments. Variable rates, could fluctuate over time based on market conditions, changing your monthly payments.

Here's a breakdown of the average interest rates for different loan types as of March 2024:

Mortgages. The national average 30-year fixed mortgage interest rate is 7.01% per year.
Home equity loans. The current average home equity loan interest rate is 8.59%.
Student loans. The average interest rate for student loans depends on the type of loan you take out. Undergraduate federal student loans are fixed at 5.50%. Federal loans for graduate students are fixed at 7.05%. For private loans, fixed rates range from 5.99% to 13.78%, while variable rates range from 5.61% to 13.27%.
Auto loans. The average auto loan interest rates are between 5.64% to 14.78% for new cars and 7.66% to 21.55% for used cars.
Personal loans. The current average personal loan interest rate is 12.10%.

It's important to note that while these are average rates, the actual interest rate you'll ultimately receive depends on many factors, including your credit profile and the lender you borrow from.

4 top tips for applying for a loan

Follow these essential tips to anticipate the application process and find the most competitive and cost-effective loan for your specific needs:

Assess your financial situation and create a budget. Before applying for a loan, take a close look at your current financial situation. Evaluate your income, expenses, and existing debts to determine how much you can realistically afford to borrow and repay each month.
Check your credit score and report. Your credit score and credit history play a significant role in determining your loan eligibility and interest rate. Before applying, obtain a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) and review it for accuracy. If you find errors, dispute them promptly to fix your score.
Shop and compare offers. One of the biggest mistakes loan seekers make is settling for the first offer they receive. Instead, take the time to research and compare offers from different lenders, including banks, credit unions, and online lenders, to find the most favorable terms and rates.
Read the fine print. Before signing an agreement, thoroughly review all the terms and conditions. Pay special attention to the fine print, which may contain crucial details about origination fees, penalties, and repayment requirements. If anything is unclear or confusing, don't hesitate to ask questions. A reputable lender will be transparent and willing to provide clarification.
Watch for origination fees. Some loans come with origination fees, which are often a small percentage of the loan, to process your application. You pay these one of two ways. In the first way, you’re charged upfront, and it’s subtracted from the amount you receive. That means if you take out a loan for $1000 with a 5% origination fee, you’re paying the lender $50 and only getting $950. In the second, the fee’s amount is added to your principal balance, meaning you get the original amount but have to pay back more. For a 5% fee on a $1000 loan, you’d ultimately owe $1050 instead of $1000.

Monitor your credit for free with EarnIn

In today's financial landscape, having a clear picture of your credit standing is more important than ever, especially when you’re looking for a loan. By keeping tabs on your credit score, you can get better rates and take proactive steps to improve your financial profile.