Loan Sense

Financial calculator focused on simple interest loans.

A simple interest loan is one where an amount of interest is calculated monthly according to the outstanding balance and interest rate. That's the cost of borrowing money, and becomes part of the payment. Money in the payment above the amount of interest goes to lessening the principal. Since the principal goes down each month, so does the interest owed. The total payment doesn't change, this results in a larger amount going to pay off the principal each month. The loan is statisfied when the principal is completely paid off, no matter how many payments were promised. Lots of loans are structured this way - they're commonly used for houses, cars, personal loans and other borrowing all around the world.

At the very start of a loan, it's easy to see totals compared to how much is being borrowed. After the loan starts, things get much harder to understand. Making extra payments to the outstandig balance can make a huge difference over time, but it's not easy to see what the savings will be or how much earlier the loan will be satisfied.

This calculator shows users where their money is going with each payment. Plan extra payments to see the savings. When shopping for a loan, verify the loan terms are correct.