Term Loan Calculator

A term loan is the most common type of personal or business loan, in which you borrow a sum of money and repay via fixed, periodic payments over a predetermined amount of time.

Term loans go by many different names, depending on their ultimate purposes and certain characteristics. The following types of financing are (usually) in the form of term loans:

• Installment loan
• Medium-term loan
• Long-term loan
• Microloan
• Real estate loan
• Franchise loan
• Equipment loan
• SBA loan
• Business acquisition loan

Unsure whether you have a term loan on your hands? Here’s an easy way to tell:

If your loan has an interest rate, chances are it’s a term loan.

For comparison’s sake, financial products such as short-term loans and merchant cash advances use factor rates rather than interest rates. Factor rates necessitate different calculations (learn more about short-term loans).

Our Merchant Cash Advance Calculator can help you calculate your payments for a merchant cash advance, which differs from a term loan in a number of ways.

Term loans have a few other defining characteristics:

• Term Length: The term length—the amount of time between when you borrow funds and must repay them in full—can vary by quite a bit. That said, most installment loans will have term lengths over one year, and might be as long as 25 years. This distinguishes them from other types of loans, which usually range in length from between three to 18 months.
• Repayments: Repayments are fixed, which means you pay the same amount each payment period. Term loans are most commonly repaid on a monthly basis, but some are repaid bi-monthly (twice a month) or weekly.

Our Guide to Term Loans offers more information on this financial product.

The payment per period will tell you how much you have to pay each payment period, whether you have to pay on a weekly, bi-weekly, or monthly basis. With this number, you will be able to tell whether your business can sustain repayments.

All borrowers know that the lower the interest rate, the better. But you might not know that your true borrowing rate can be higher than the interest rate leads you to believe; lenders can drive up the cost of the loan by including fees, such as origination or maintenance fees.

The APR, short for annual percentage rate, is used to show the true rate of borrowing, including the interest rate as well as extra fees that are charged during the lending process. This number can tell you what you’re really paying for your loan on an annual basis.

The APR is especially useful for comparing loan offers. If you have multiple loans with similar interest rates, the APR will show you which one actually has a higher rate of borrowing.

Head over to our Beginner’s Guide to APR for a more thorough explanation on the annual percentage rate.

The total repayment, financing cost, and cents on the dollar are used to understand the total cost of borrowing. Even if you think you understand the periodic payments and the true rate of borrowing, lenders can hide exactly how much you are paying for the money by failing to disclose the total cost of borrowing. You might be paying more than you think.

The total repayment tells you how much you’ll repay, including the original borrowing amount and all interest charges and fees. The financing cost takes a step back and simply tells you how much you’re paying in interest charges and fees for borrowing.

The most useful metric, especially for comparing offers, is the cents on the dollar cost. Like the financing cost, this number tells you how much you’re paying in interest charges and fees, but it also tells you how much you’re paying in fees per dollar borrowed. This number can be useful for comparing loans with different borrowing amounts and fees, or for simply understanding the total cost of borrowing.