Understand your loan figures.

Four figures explain much of a simulation: the amount received, the rate, how long you pay and how the balance falls.

Principal: the initial amount

This is the amount borrowed. Each payment returns part of that principal and pays interest on the rest.

Rate and term

A fixed-payment simulation divides a fixed annual nominal rate by 12 for the monthly rate. The term is the number of monthly payments. An effective annual rate requires a different conversion and must not be entered as a nominal rate.

Why does the payment breakdown change?

With fixed payments, each month’s interest is calculated on the outstanding balance. As the balance falls, interest falls and the principal portion increases.

What a fixed-payment simulation includes

Principal and interest only, with payments at each month’s end. Excludes fees, insurance, taxes, grace periods and rate changes. Figures are rounded to two decimals; lenders may use different schedules or rounding.