Compound Interest Loan Calculator

Compound interest loan payment calculator for realistic repayment estimates

A compound interest loan is a loan where interest is calculated on the current balance and then added on a repeated schedule. That schedule is called the compounding frequency. In everyday life, many loans are quoted with an annual interest rate, but the balance is updated monthly or daily, and your payment might be monthly, weekly, or bi-weekly. Small differences in compounding and payment frequency can change your total interest and how quickly you pay down the balance.

This calculator helps you estimate a payment amount and the full cost of borrowing under compound interest. You enter the loan amount, the annual interest rate, and the term. Then you pick how often you make payments and how often interest compounds. The calculator converts the annual rate into an effective rate per payment period, calculates a baseline payment for the chosen term, and then simulates the repayment over time so you can see total interest and a practical payoff timeline. If you add an optional extra payment each period, it also estimates how much sooner the loan could be paid off and how much interest you could save.

The outputs are designed for decisions, not just math. You get a periodic payment estimate, the total amount repaid, the total interest cost, and a clear comparison between a standard payment and a payment with extra contributions. This is useful for comparing offers, checking affordability, planning a refinancing decision, or simply understanding the long-term cost of a loan beyond the headline interest rate.

Assumptions and how to use this calculator

• The annual rate is treated as a nominal annual rate that compounds at the frequency you select.
• Payments are assumed to be made at equal intervals, and interest is applied evenly across each payment period.
• Extra payments are applied every period and reduce the balance faster (they are not treated as a one-time lump sum).
• Fees, insurance, taxes, penalties, and rate changes are not included unless they are baked into the rate you enter.
• If the chosen payment is too small to cover interest for a period, the result is invalid (this is negative amortization).

Common questions

What does “compounding frequency” mean for a loan?

Compounding frequency is how often the lender updates the balance by adding interest. If interest compounds monthly, the lender effectively applies a monthly rate derived from the annual rate. If it compounds daily, the balance grows slightly faster between payments (all else equal). When payment frequency and compounding frequency differ, your true cost depends on how those schedules interact, which is why this calculator lets you set both.

Why is my total interest different from a simple interest estimate?

Simple interest assumes interest is calculated only on the original principal. That is not how most loans work in practice. With compound interest, the balance changes over time, and interest is calculated on the remaining balance for each period. On amortizing loans, early payments include more interest and less principal, and the split shifts over time as the balance declines.

What happens if I choose weekly or bi-weekly payments?

More frequent payments can reduce interest because the balance is reduced sooner and more often. However, the size of the benefit depends on the lender’s rules and the compounding frequency. Weekly and bi-weekly schedules can also feel “cheaper” because each payment is smaller, but you are making more payments per year. The right comparison is total interest and total paid, which this calculator shows.

How should I use the “extra payment” option?

Treat extra payment as a consistent amount you can commit to each period (even a small amount). The calculator assumes the extra goes directly toward reducing the balance. If your lender applies extra payments differently, the real outcome can vary, but the estimate is still useful for seeing the scale of possible interest savings and how much faster you could finish.

When will this calculator be less accurate than my lender’s quote?

Your lender’s quote may include fees, insurance, taxes, promotional rates, compounding rules tied to exact calendar days, and rounding conventions that differ from simple period-based math. Variable-rate loans can also change over time. If you want a closer match, use the lender’s nominal rate and the correct compounding schedule, and treat the result as a planning estimate rather than a contractual figure.