How the payment is worked out
A standard amortizing loan has a fixed payment. Each month, interest is charged on whatever you still owe, and the rest of the payment reduces the balance. Early on most of the payment is interest; later most of it is principal. The calculator uses the usual formula payment = P × r / (1 − (1 + r)−n), where P is the amount borrowed, r the interest rate per month and n the number of monthly payments.
Canadian vs US mortgages
In the US, interest on a mortgage is normally compounded monthly. By law, fixed-rate Canadian mortgages compound semi-annually, which makes the monthly payment very slightly lower for the same quoted rate. Use the compounding menu to pick the style that matches your lender; for car loans and personal loans, monthly is the usual choice.
Why extra payments are powerful
Every extra dollar you pay goes straight to principal, so you stop paying interest on it for the rest of the loan. Even a modest extra amount each month can cut years from a 25-year mortgage. Try adding $100 or $200 above and watch the "Interest saved" and "Time saved" figures change.
What is not included
Property tax, home insurance, mortgage default insurance, condo fees and lender fees are not part of this number. Your real monthly housing cost will be higher. Always confirm figures with your lender.
Frequently asked questions
What is a good interest rate?
It depends on the market, your credit, the loan type and the term. Compare offers from several lenders on the same day and the same term.
Should I choose a shorter term?
A shorter term means higher payments but far less total interest. Pick the shortest term whose payment you can comfortably afford with some room for surprises.
Does this work for car loans?
Yes. Set the amount, rate and term in years (for example 5) and keep compounding on monthly.
Are the results exact?
They are accurate estimates of the standard formula. Your lender may round payments, charge fees or use a different payment schedule.