Question 1

How is a loan payment calculated?

Accepted Answer

Using the amortization formula, payment = P × r / (1 − (1+r)^−n). Each payment covers that month's interest first, with the rest reducing principal.

Question 2

How much does an extra payment save?

Accepted Answer

Extra payments go straight to principal, cutting both the payoff time and total interest. Add an amount above to see the effect.

Question 3

What's the difference between APR and interest rate?

Accepted Answer

The interest rate is the cost of borrowing the principal; APR also includes certain fees, so it's usually a bit higher and better for comparing offers.

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