# Bank Loan Calculator

Happy New Year 2021
Amortization ~ Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.

Annual Percentage Rate (APR) ~ A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.

A number used to compare costs associated with mortgage loans and other forms of financing.

Annual Percentage Yield (APY) ~ The percentage, required government regulations, to be disclosed on interest-bearing deposit accounts that reflects the total interest to be earned based on an institution's compounding method, assuming funds remain in the account for a 365-day year.

Compound Interest ~ Interest that is calculated by adding the interest earned in the current period to the principal and figuring the next period's interest on this "compounded" total amount.

Compounding Method ~ Used in Bank rate tables. These include: S--Simple interest. A--Compounded annually. H--Compounded semi-annually. Q--Compounded quarterly. M--Compounded monthly. D--Compounded daily.

Interest Rate (IR) ~ The rate a lender charges an individual to borrow money.

level payment ~ A method of repayment where periodical payments of principal and interest are made in a certain way so the payment amount remains constant.
Principal ~ The original balance of money lent on an outstanding loan and fees, excluding interest. Also the remaining balance of a loan, excluding interest.

Simple Interest (SI) Interest computed only on the principal balance, without compounding.

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