Loan Calculator Canada With Extra Payments Based On

Loan Payment Formula:

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

Principal Amount (P):

CAD

Annual Interest Rate:

Loan Term:

years

Extra Payment Type:

Extra Payment Amount:

CAD

Extra Payment Frequency:

Monthly Payment (PMT):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Canadian Loan Payment Calculator?

This calculator computes monthly loan payments for Canadian loans, accounting for extra payments either as lump sums or periodic additions. It helps borrowers understand how extra payments can reduce interest costs and shorten loan terms.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

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

Where:

\( PMT \) — Monthly payment (CAD)
\( P \) — Principal loan amount (CAD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of months in loan term

Extra Payments: The calculator then adjusts the amortization schedule to account for extra payments, either as a one-time lump sum or periodic additions.

3. Importance of Extra Payments

Details: Making extra payments can significantly reduce the total interest paid and shorten the loan term. Even small additional amounts applied to principal can have a substantial impact over time.

4. Using the Calculator

Tips: Enter the principal amount in CAD, annual interest rate (without % sign), loan term in years, and select your extra payment strategy. For accurate results, ensure all values are positive and within reasonable ranges.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my loan?
A: Extra payments reduce the principal faster, which decreases total interest and may shorten the loan term.

Q2: Is it better to make lump sum or periodic extra payments?
A: Generally, making extra payments as early as possible saves more interest, but consistent periodic payments also provide significant benefits.

Q3: Are prepayment penalties common in Canada?
A: Some Canadian loans have prepayment penalties, especially fixed-rate mortgages. Check your loan agreement.

Q4: How does compound frequency affect calculations?
A: Canadian mortgages typically compound semi-annually, but this calculator uses monthly compounding for simplicity.

Q5: Can I use this for mortgage calculations?
A: Yes, though Canadian mortgages have specific rules (like semi-annual compounding) that may make this slightly less precise.