Loan calculation methodology

This calculator models fixed-rate loans with monthly payments. It supports equal total payment and equal principal repayment methods.

Monthly interest equals the balance multiplied by the annual interest rate divided by 12. Interest is rounded half up to the nearest cent.

For equal total payment, principal equals the required monthly payment minus that month's interest. For equal principal, the required monthly principal stays fixed and that month's interest is added to the total payment. Any extra principal is added to the principal portion.

The final payment is adjusted to bring the balance exactly to zero. For equal total payment, if the required payment does not exceed monthly interest, the calculator reports that the loan will not amortize under the entered terms.