1. What is a Loan Calculator With Variable Payments?

This calculator computes the amortization schedule for a loan with variable payment amounts. It's useful for situations where payments change over time, such as graduated repayment plans or when making extra principal payments.

2. How Does the Calculator Work?

The calculator uses the iterative balance equation:

Where:

• \( B_t \) — Loan balance at time t
• \( r \) — Periodic interest rate (annual rate / 12)
• \( \text{payment}_t \) — Payment amount at time t

Explanation: The calculator processes each payment in sequence, applying interest first, then principal reduction, and updating the balance accordingly.

3. Importance of Loan Calculation

Details: Understanding how each payment affects your loan balance helps in financial planning, especially when considering extra payments or variable payment schedules.

4. Using the Calculator

Tips: Enter the initial loan amount, annual interest rate, and a comma-separated list of payment amounts. The calculator will show how each payment is applied.

5. Frequently Asked Questions (FAQ)

Q1: Can I use this for mortgages?
A: Yes, this works for any amortizing loan where you want to model variable payments.

Q2: What if my payments are monthly but vary?
A: Just enter each monthly payment amount in order, separated by commas.

Q3: How does extra principal payment affect the loan?
A: Extra payments reduce principal faster, decreasing total interest paid and potentially shortening the loan term.

Q4: What happens if a payment is less than the interest due?
A: The calculator will show negative principal reduction, meaning the loan balance would increase (negative amortization).

Q5: Can I model irregular payment intervals?
A: This calculator assumes regular intervals (like monthly). For irregular intervals, each payment would need to account for the exact days between payments.