This loan calculator works out the monthly payment for any fixed-rate loan, along with the total interest and the total amount you will repay. It also shows a full amortization schedule and how much time and interest you save by paying a little extra each month. Use it for personal loans, car loans, student loans and mortgages.
Loan Calculator
Loan Payment Formula
Fixed-rate loans are repaid in equal monthly payments. The payment is calculated with the standard amortization formula:
M = P × i ÷ (1 − (1 + i)−n)
- M is the monthly payment
- P is the loan amount (principal)
- i is the monthly interest rate, which is the annual rate ÷ 12. For example, 6% a year is 0.06 ÷ 12 = 0.005.
- n is the number of monthly payments. For example, 5 years is 60 payments.
Example: $20,000 at 6% for 5 years. i = 0.005 and n = 60, so M = 20,000 × 0.005 ÷ (1 − 1.005−60) = $386.66 a month. Over 60 payments you repay $23,199.36, which means $3,199.36 in interest.
Example Monthly Payments
| Loan | Rate | Term | Monthly payment | Total interest |
|---|---|---|---|---|
| $10,000 | 5% | 3 years | $299.71 | $789.52 |
| $20,000 | 6% | 5 years | $386.66 | $3,199.36 |
| $25,000 | 7% | 5 years | $495.03 | $4,701.80 |
| $250,000 | 4% | 30 years | $1,193.54 | $179,673.77 |
| $300,000 | 6.5% | 30 years | $1,896.20 | $382,633.47 |
How Amortization Works
Each monthly payment is split between interest, charged on the balance you still owe, and principal, which reduces the balance. At the start of the loan the balance is high, so most of the payment goes to interest. As the balance falls, more of each payment goes to principal. The amortization schedule in the calculator shows this split for every month or year.
How Extra Payments Save Money
Any amount you pay above the required payment goes straight to the principal. That lowers the balance on which interest is charged, so the loan ends sooner and costs less.
Example: on a $25,000 loan at 7% for 5 years, paying an extra $100 a month pays the loan off 11 months early and saves about $939 in interest. On a $300,000 mortgage at 6.5% for 30 years, an extra $200 a month saves about $103,000 and takes nearly 7 years off the loan.
Before making extra payments, check that your loan has no prepayment penalty and ask the lender to apply the extra amount to the principal.
Tips for Comparing Loans
- Compare the APR, not only the interest rate. The APR includes most fees, so it shows the true yearly cost. See the APR Calculator.
- A longer term means a lower payment but more interest. A $20,000 loan at 6% costs $3,199 in interest over 5 years, but $1,904 over 3 years, although the monthly payment is higher ($608.44 vs $386.66).
- Check the total of all payments, not just whether the monthly payment fits your budget.
This calculator gives estimates for fixed-rate loans with monthly payments. It does not include fees, insurance, taxes or variable rates. Your lender’s loan estimate is the official figure.
Frequently Asked Questions
How do I calculate a monthly loan payment?
Use M = P × i ÷ (1 − (1 + i)−n), where P is the loan amount, i is the annual rate ÷ 12, and n is the number of months. The calculator above does this instantly.
What is the monthly payment on a $20,000 loan?
At 6% over 5 years it is $386.66 a month. At 8% over 5 years it is $405.53.
How much interest will I pay on my loan?
Total interest is the total of all payments minus the amount borrowed. The calculator shows it, along with how it is split across each year of the loan.
Does paying extra on a loan reduce interest?
Yes. Extra payments reduce the principal, so less interest is charged for the rest of the loan, and you finish paying it off sooner.