Loan Amortization Calculator Canada Government

Amortization Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (PMT):

Total Payment:

Total Interest:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Loan Amortization?

Loan amortization is the process of paying off a debt over time through regular payments. The Canada Government loan amortization calculator helps you understand how much you'll pay each month and how much interest you'll pay over the life of the loan.

2. How Does the Calculator Work?

The calculator uses the standard amortization formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( P \) — Principal loan amount (CAD)
\( r \) — Monthly interest rate (annual rate divided by 12)
\( n \) — Total number of payments (loan term in years multiplied by 12)
\( PMT \) — Monthly payment amount (CAD)

Explanation: This formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest.

3. Importance of Amortization Calculation

Details: Understanding your amortization schedule helps with budgeting, comparing loan options, and making informed decisions about prepayments or refinancing.

4. Using the Calculator

Tips: Enter the principal amount in CAD, annual interest rate as a percentage, and loan term in years. The calculator will show your monthly payment, total repayment amount, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What types of Canadian government loans can this calculator be used for?
A: This calculator works for most fixed-rate government-backed loans including Canada Student Loans, Canada Mortgage and Housing Corporation (CMHC) insured mortgages, and small business loans.

Q2: How does the interest rate affect my payments?
A: Higher interest rates increase both your monthly payment and the total interest paid over the life of the loan. Even small rate differences can have significant long-term impacts.

Q3: What's the difference between amortization period and loan term?
A: For government loans in Canada, these typically refer to the same thing - the total time you have to repay the loan in full.

Q4: Are there prepayment options for Canadian government loans?
A: Many Canadian government loans allow prepayments without penalty, which can reduce your total interest costs. Check your specific loan terms for details.

Q5: How often are payments typically made on Canadian government loans?
A: Most government loans in Canada require monthly payments, though some may offer bi-weekly or accelerated payment options.