This free online Missing Term Loan Calculator will calculate the missing variable from three known variables.
If you would like the option to create and print a schedule of payments, please visit the Free Loan Amortization Calculator, which also solves for an unknown variable.
If you know any 3 of the 4 loan terms (principal, interest rate, monthly payment and number of payments remaining) this calculator will use Time Value of Money (TVM) calculations to find the missing term.
The most common use for this calculator is to calculate a loan payoff amount. After all, you usually know the interest rate, the number of payments remaining, and the monthly payment. What's not always clear is how much money it will take to pay off a loan this month.
That's because the payoff amount cannot be arrived at by simply multiplying the monthly payment amount by the number of payments remaining, since future payments include interest charges that will not apply if the loan is paid off early.
Even if you know the principal, interest rate, number of payments, and the monthly payment amount, there is one more loan term that is always "missing" from a lender's loan agreement.
What is the missing term?
It's called forgone potential future value.
Forgone potential future value is what you will give up when you pay interest to a lending institution rather than invest that money into an investment that will earn interest.
Of course, the amount of potential future value you give up depends on the investment's interest rate and on how long you leave the investment to grow.
So before you sign the loan papers be sure to solve for the ultimate missing loan term like this:
Finally, carefully weigh what you are getting in return for the interest charges (nothing!) versus the potential future value you are giving up.
With that, let's use the missing term loan calculator to calculate the unknown variable.
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Principal or current payoff amount: If known, enter the principal balance or current payoff amount. Otherwise leave blank and complete the other three fields.
Annual interest rate: If known, enter the annual interest rate as a percentage (for .065, enter 6.5%). If the interest rate is not known, to save the calculator from making unnecessary iterations, please select your best guess from the drop down menu (default guess is 10%) and the calculator will attempt to calculate the rate for you given the other three loan terms.
Payments remaining: If known, enter the number of payments remaining on the loan. Otherwise, leave blank and complete the other three fields.
Payment amount: If known, enter the monthly payment amount. Otherwise, leave blank and complete the other three fields.
Missing term: This cell will state the the title of the missing term that has been calculated, with the amount of the missing term located in the right-hand column.
Total years: This result converts the number of monthly payments remaining to the number of years remaining.
Total payments: This result is the total of all payments between now and when the loan is paid off.
Total interest: This result is the total interest that will be paid between now and when the loan is paid off.