Understanding loan payments
Loan payments are usually made every month and include both principal and interest. The principal is the amount borrowed, while interest is the cost charged by the lender.
How interest affects the total cost
A higher interest rate increases both the monthly payment and the total amount paid over the life of the loan. A longer repayment term can reduce the monthly payment, but it often increases the total interest paid.
Using the calculator effectively
Try different loan amounts, interest rates and repayment periods to compare scenarios before choosing a financing option.