# Loan Calculator

## What is this Loan?

A loan is an amount of money borrowed for a set period within an agreed repayment schedule. The repayment amount includes the interest charged by the lender, which is calculated over the term of the loan. The loan calculator is a dynamic universal tool that helps you understand the structure of a loan based on available information or your configurations.

This universal tool that can be highly customized can also function as, for instance, a commercial loan calculator, consumer loan calculator, or a short term loan amount calculator. Its key strength lies in its ability to estimate borrowing expenses through the annual percentage rate (APR) and quantify your periodic and total payments' structure.

When about to take credit, lenders often provide incomplete information. This loan calculator allows you to choose what rate you are aware of and conduct a multidimensional analysis. Through various visual representations, you can quickly understand all the details of the results.

## How to use Loan Calculator?

To utilize this calculator, start by inputting a number in any order. You can estimate anything in any order. Learning how to use this tool requires understanding the terms associated with it. Here are some:

**Interest rate (r)**: The quoted annual rate.**Annual Percentage Rate (APR)**: An estimate of the borrowing cost per year as a percentage of the loan amount.**Effective Annual Percentage Rate (EAPR)**: A more accurate version of the simple APR.**Loan amount (A)**: The loan under consideration, the principal part of the total payment.**Compounding frequency (m)**: How frequent the lender computes interest on the principal can be yearly (m = 1) or quarterly (m = 4). But banks generally compound monthly (m = 12).**Loan term (t)**: The interval over which you're obliged to repay the loan amount and all connected costs.**Petition frequency (q)**: The regularity of due dates for loan repayment.**Periodic payment (P)**: The required payment for each period.**Prepaid fees and Loaned fees**: Fees that you need to pay in advance or are rolled into the loan.

After inputting the necessary parameters, the outputs will be:

**Total interest payment**and its composition (loan amount and additional fee)**Total additional fee with interest on it****Total payment and the total finance charge**(interest plus additional fees)

## Example to Demonstrate the Calculator

Let's consider a hypothetical situation to demonstrate how the calculator works. Imagine you take a loan of **$10,000** with a **12%** annual interest rate (r), compounded monthly (m = 12). The loan term (t) is five years, and payments are to be made monthly (q = 12). There are no attached fees for simplicity.

Input the values into the tool accordingly. The calculator will show you the different components of your loan's structure, including the overall interest and the periodic payments required. This calculated breakdown lets you make an informed choice on the suitability of the loan based on your financial capacity.