How to choose the right loan structure
Not every loan behaves the same. Some are paid back a little each period, some accrue interest with nothing due until maturity, and some are priced as a discounted bond where you receive less up front and repay a fixed amount at the end. This page gives you three calculators that cover the most common cases so you can estimate payments, totals, and payoff timing with clarity.
1) Amortized loan: fixed monthly payment over the term
Most consumer loans (mortgages, auto loans, many personal loans) are amortized. Each payment contains both interest and principal. Early on, interest dominates; later, principal dominates as the balance falls. The amortization table shows exactly how much of each payment goes where and how the balance declines, which is helpful when planning extra principal payments or comparing term lengths.
2) Deferred-payment loan: balance due at the end
In some arrangements-promissory notes, certain education or bridge loans-you don’t pay anything until the end. Interest accrues during the term, and the full amount (principal plus accumulated interest) is due at maturity. These can be convenient in the short run but produce a bigger number at the end, so it is important to understand how compounding turns a small rate into a larger obligation over time.
3) Discount bond: pay par at maturity, borrow less today
Bonds flip the perspective: the maturity amount is predetermined, and the calculator solves for the amount received today (present value) given a required yield. The difference between what you receive and what you repay is effectively the total interest. This framing is common in corporate notes and zero-coupon bonds.
Compounding choices
- Monthly (APR): rate/12 applied each month; typical for consumer loans.
- Quarterly (APR): rate/4 applied every quarter.
- Annually (APY): an effective annual rate; per-period rate is the 12th/4th/1st root of the APY.
Reading the charts & tables
- Pie charts show principal vs. interest share of the total obligation for the chosen structure.
- The amortization tables list each period’s interest, principal (if any), and ending balance.
- For amortized loans, payment is level each period. For deferred or bond style, there are no interim payments; the schedule shows compounding and the final lump sum.
Tips for comparing scenarios
- Shorter terms raise the payment but reduce lifetime interest dramatically.
- Even small extra principal on an amortized loan can move the payoff date forward and cut interest.
- Deferred structures grow faster with higher compounding frequency; check the final number carefully.
- With bonds, a higher required yield lowers the present value you’d receive today.
These are educational estimates, not lender quotes. Confirm terms with your lender or advisor before making financial decisions.