How To Use the Loan Calculator

  • Simply input values for the principal, interest rate, and payment amount.

  • Determine if you would like to pay back monthly, quarterly, or annually.

  • Last, decide if you want to make an additional payment to pay off the interest accrued each year by checking the box. This will be an extra payment in addition to the principal payment entered.

  • Otherwise, interest will be tabulated and added back to the principal at the end of each year.

  • If payments are not sufficient to keep up with principal and compounding interest, the simulation will terminate after 50 years.

Notes

  • Repaying annually will take the longest because you are repaying the loan at the same rate it is compounding, whereas repaying monthly reduces the principal faster than it compounds, which will save interest and pay the loan off faster.

  • Compare your results to any amortized loan or mortgage calculator out there. The larger the loan or longer the timeline the more pronounced the differences become.

  • You’ll also see that paying off annual interest saves a significant amount in interest costs and pays off the loan even faster. This option replicates part of the strategy that Nelson Nash used in the Equipment Financing section of Becoming Your Own Banker.

  • This app was designed for educational purposes only with given assumptions about the loan. The way each life insurance company treats loans and repayments may differ slightly. Always consult a licensed agent or advisor before making a financial decision such as taking out a policy loan.

The Loan Calculator is down for maintenance. Thank you for your patience