Laser Focus World is an industry bedrock—first published in 1965 and still going strong. We publish original articles about cutting-edge advances in lasers, optics, photonics, sensors, and quantum technologies, as well as test and measurement, and the shift currently underway to usher in the photonic integrated circuits, optical interconnects, and copackaged electronics and photonics to deliver the speed and efficiency essential for data centers of the future.

Our 80,000 qualified print subscribers—and 130,000 12-month engaged online audience—trust us to dive in and provide original journalism you won’t find elsewhere covering key emerging areas such as laser-driven inertial confinement fusion, lasers in space, integrated photonics, chipscale lasers, LiDAR, metasurfaces, high-energy laser weaponry, photonic crystals, and quantum computing/sensors/communications. We cover the innovations driving these markets.

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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

How Do You Calculate Monthly Payments on a Loan?

If you don’t have the cash on hand to cover an expense, a loan can come in handy. While there are a variety of loans out there, many of them are installment loans. With an installment loan, you’ll receive a lump sum of money upfront and repay it over time via fixed monthly payments or installments. Speaking of monthly payments, how do you calculate them on a loan? Keep reading to find out.

 

Why It’s Important to Know Your Monthly Payments

There are several reasons you should understand your monthly loan payments. First and foremost, they can give you an idea of the total cost you’ll pay to borrow money. You may also use this knowledge to potentially lower your costs. If your payments are low and you can afford to put more toward your loan every month and/or pay off your loan early, you may save hundreds or even thousands less in interest.

 

Ways to Calculate Monthly Loan Payments

When you accept a loan from a lender, you’ll receive the principal, which is the money you originally agreed to pay back, and interest or the charge you’ll pay for the privilege of borrowing money. In most cases, your monthly loan payments will be divided into equal payments over the loan term. Calculating your payments will depend on the type of loan you take out. The most common types of loans include:

  • Interest-only loans: While interest-only loans are less common, they do exist. With these loans, you only pay interest in the first few years. This means your principal will stay as is.
  • Amortizing loans: Amortizing loans require you to pay toward both the principal and interest over a set period of time. The amount you pay on interest and principal will change over the loan term, but your monthly payment will stay the same.
  • Credit card loans: Credit cards are revolving lines of credit. You can use as much or as little as you’d like up to a set credit limit. You’ll only pay interest on the amount you borrow.

 

Use a Loan Payment Calculator

While you can try to calculate your monthly payments on your own, doing so can get complicated. That’s why using a loan payment calculator is a good idea. All you have to do is plug in your desired loan amount and annual percentage rate or APR, which considers interest and other fees. The calculator will then spit out your estimated monthly loan payments based on the info you provided. You’ll be able to see your loan payment for various loan terms.

 

The Bottom Line

A loan can help you meet a variety of short-term or long-term financial goals. Before you commit to one, however, make sure you calculate your monthly loan payments. Once you do, you’ll be able to avoid unwanted financial surprises and budget accordingly.

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