How a US secured loan payment is worked out
A secured loan is backed by something you own, such as a savings account, a certificate of deposit, a vehicle or the equity in your home. The lender charges the note rate monthly at one twelfth of the yearly rate and you repay in equal monthly payments. This calculator does exactly that.
With the example inputs, $25,000 over 5 years at 8% costs $506.91 a month. That is $30,414.59 to repay, of which $5,414.59 is interest. The 8% is only an example: use the rate on your offer.
Fees change the APR
An origination fee and closing costs raise the cost beyond the interest. A 2% origination fee and $150 of closing costs come to $650.00. If they are deducted from the loan, you receive less than you repay on. The APR with fees, the nominal yearly rate on the cash you actually receive, is then 9.12% against the 8% note rate, and the total charge is $6,064.59. The payment stays $506.91.
If the same fees are added to the loan instead, the loan the interest is charged on becomes $25,650.00, the payment rises to $520.09 and the APR with fees is 9.09%. Which applies is set by your lender's offer; choose it in the fees field.
Choosing a term
A longer term lowers the payment but costs more interest. Over 10 years the example loan costs $303.32 a month and $36,398.28 in total; over 15 years it costs $238.91 a month. The results list the payment and total repayable at 5, 10, 15, 20 and 25 years.
What a monthly budget could borrow
Enter what you can pay each month to work backwards. A budget of $450 a month at 8% over 5 years could repay a loan of up to $22,193.30, after taking off any fees added to the loan.
How much the security covers
The loan as a share of the security's value shows how much cushion the lender has. A $25,000 loan against $50,000 of savings or a vehicle is 50%. Lenders value a vehicle or a home on their own terms and cap the loan, so use their figure when you have it.
To work out a combined loan to value on a home, use the US secured loan LTV calculator.
What this calculator leaves out
It assumes a fixed note rate and equal monthly payments. It does not model a variable rate such as a home equity line of credit, a prepayment penalty or the lender's approval. The lender can take the security if you do not repay.
If you will pay only interest for a time, use the interest only secured loan calculator.
Use the right country page
This page uses US terms such as origination fee and closing costs, and is in dollars. Second charge loans with a broker fee and an APRC are a UK product.
For the UK product, open the UK secured loan calculator.
Inputs for the US secured loan calculator
Amount to borrow
The loan amount you are applying for.
Loan term
How many years you will take to repay.
Interest rate
The yearly note rate on your offer, charged monthly at one twelfth. The 8% shown is only an example.
Origination fee
A percentage of the loan from your offer. Enter zero if there is none.
Closing and other fees
Fixed costs from your offer, in dollars.
Fees are
Whether fees are deducted from the loan, added to it or paid in cash.
Value of the security
What the savings, certificate, vehicle or home securing the loan is worth.
Monthly budget for repayments
What you can afford each month, to see how much that could borrow.
CALCULATOR QUESTIONS
US secured loan calculator questions
What is a secured loan?
A loan backed by something you own, such as savings, a certificate of deposit, a vehicle or a home. If you do not repay, the lender can take it.
What is the APR with fees?
The nominal yearly rate on the cash you receive, with the fees counted. On the fee example it is 9.12%, against an 8% note rate.
Is a secured loan cheaper than an unsecured one?
Often the rate is lower because the lender has security, but a longer term or fees can make it cost more overall. Compare the APR and the total repayable.
Which fees can I enter?
An origination fee as a percentage of the loan and closing or other fees in dollars. Choose whether they are deducted, added or paid in cash.
How much can I borrow?
The lender decides from the value of the security, your income and credit history. A $450 monthly budget at 8% over 5 years could repay up to $22,193.30.
What if I need to pay only interest for a while?
Use the interest only secured loan calculator, which shows the monthly interest and the balloon due at the end.