Loan Payment Calculator
Enter loan amount, interest rate, and term to calculate your monthly payment, total interest, and see how your loan amortizes over time. All calculations run in your browser.
| Year | Starting Balance | Principal Paid | Interest Paid | Ending Balance |
|---|
Common Loan Scenarios
Click a scenario to load it into the calculator
Loan Payment Formula
Monthly Payment Formula
For a fixed-rate amortized loan:
M = P x [r(1+r)^n] / [(1+r)^n - 1]
Where:
- M = monthly payment
- P = loan principal (amount borrowed)
- r = monthly interest rate (annual rate / 12)
- n = total number of payments (years x 12)
Total Interest Formula
Once you know the monthly payment:
Total Interest = (M x n) - P
The total interest is the total amount paid over the life of the loan minus the original principal.
Zero-Interest Loans
When the interest rate is 0%, the formula simplifies to:
M = P / n
The principal is divided equally across all payments with no interest cost.
How Amortization Shifts Over Time
Each month, interest is calculated on the remaining balance:
Interest portion = Balance x r
Principal portion = M - Interest
As the balance decreases, less goes to interest and more goes to principal. This is why the last few years pay down the balance faster than the first few.
Worked Examples
Auto Loan
$20,000 loan at 6.5% for 5 years (60 months).
r = 6.5% / 12 = 0.5417%
M = 20,000 x [0.005417 x 1.005417^60] / [1.005417^60 - 1]
M = $391.32/month
Total paid: $23,479.49 -- Total interest: $3,479.49
Student Loan
$35,000 loan at 5.5% for 10 years (120 months).
r = 5.5% / 12 = 0.4583%
M = $379.84/month
Total paid: $45,580.80 -- Total interest: $10,580.80
Interest is 30.2% of the original amount.
Mortgage (P&I)
$250,000 at 6.75% for 30 years (360 months).
r = 6.75% / 12 = 0.5625%
M = $1,621.50/month
Total paid: $583,740.00 -- Total interest: $333,740.00
You pay more than the loan amount in interest alone over 30 years.
The Power of a Shorter Term
Same $250,000 mortgage at 6.75% but over 15 years:
M = $2,210.04/month
Total interest: $147,807.20 -- that is $185,933 less interest than the 30-year term, in exchange for $589 more per month.
Common Mistakes in Loan Calculations
- Using the annual rate instead of the monthly rate: The formula requires the monthly rate (annual rate / 12). Using 6% instead of 0.5% per month will produce wildly incorrect results.
- Confusing APR with interest rate: APR includes fees and costs beyond the base interest rate. A loan with a 6% rate and 1% origination fee has a higher effective APR. This calculator uses the base interest rate -- actual costs may be higher if the loan has additional fees.
- Ignoring how term length affects total cost: A longer term lowers the monthly payment but dramatically increases total interest. A $20,000 loan at 6% costs $1,904 in interest over 3 years but $3,920 over 7 years -- more than double.
- Assuming all loan payments work the same way: Some loans (like interest-only loans or balloon-payment loans) have different payment structures. This calculator assumes standard fully-amortized payments where each payment covers both principal and interest.
- Forgetting about additional costs: Mortgage payments often include property tax, insurance, and PMI beyond principal and interest. Auto loans may require comprehensive insurance. The monthly payment shown here is the loan portion only.
Frequently Asked Questions
How is a monthly loan payment calculated?
Monthly payment is calculated using the standard amortization formula: M = P x [r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the monthly interest rate (annual rate / 12), and n is the total number of monthly payments. If the interest rate is 0%, the payment is simply the principal divided by the number of months.
What is total interest on a loan?
Total interest is the amount you pay beyond the original principal over the life of the loan. It equals (monthly payment x number of payments) - principal. For a $20,000 loan at 6% for 5 years, total interest is approximately $3,200 -- meaning you repay $23,200 total for $20,000 borrowed.
How does the interest rate affect monthly payments?
Higher interest rates increase both the monthly payment and the total interest paid. On a $20,000 loan for 5 years, increasing the rate from 5% to 8% raises the monthly payment by about $28 and adds roughly $1,686 in total interest. Even small rate differences compound significantly over time.
How does loan term length affect total cost?
Longer loan terms lower the monthly payment but increase total interest. A $20,000 loan at 6%: a 3-year term costs about $1,904 in total interest with a $608/month payment, while a 7-year term costs about $4,565 in interest with a $292/month payment. The monthly savings come at the cost of paying much more overall.
What is loan amortization?
Amortization is the process of paying off a loan through equal periodic payments. Each payment is split between interest (calculated on the remaining balance) and principal. Early payments are interest-heavy because the balance is high. Over time, the interest portion shrinks and more goes to principal. By the last payment, nearly all of it is principal.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal alone. APR (Annual Percentage Rate) includes the interest rate plus any additional fees and costs (origination fees, closing costs, points), expressed as an annual percentage. APR gives a more complete picture of borrowing cost. This calculator uses the base interest rate -- your actual APR may be higher if the loan includes fees.
Can I use this for car loans?
Yes. This calculator works for any fixed-rate, fully-amortized loan -- car loans, personal loans, home equity loans, or any loan with a fixed rate and fixed term. Enter the amount you are financing (loan amount after any down payment), the annual interest rate, and the term in years.
Can I use this for mortgages?
This calculator computes the principal and interest (P&I) portion of a mortgage. However, actual monthly mortgage payments typically include property tax, homeowner's insurance, and possibly PMI (private mortgage insurance), which are not included here. For a dedicated tool, see our mortgage calculator.
Why are early loan payments mostly interest?
Interest is always calculated on the outstanding balance. At the start of a loan, the balance is at its maximum, so the interest portion of each payment is at its highest. As you pay down principal month by month, the balance decreases, less interest accrues, and a larger share of each fixed payment goes toward reducing the balance.
Does this calculator store my data?
No. All calculations run entirely in your browser using JavaScript. No inputs, results, or financial data are sent to any server. Nothing is stored or logged.
Related Tools
- Loan Amortization Schedule -- see a full month-by-month breakdown of principal and interest
- Mortgage Calculator -- estimate mortgage payments including taxes and insurance
- Compound Interest Calculator -- understand how compound interest grows investments and debts
- Debt Payoff Calculator -- plan a payoff strategy for existing debts
- Student Loan Calculator -- estimate monthly payments for student loans
Privacy & Limitations
- Client-side only. No data is sent to any server. No cookies, no tracking of inputs or results.
- Standard amortization only. This calculator assumes fixed-rate, fully-amortized loans with equal monthly payments. It does not handle variable rates, interest-only periods, balloon payments, or bi-weekly payment schedules.
- Base interest rate, not APR. The calculation uses the stated interest rate. If your loan includes origination fees or other costs, your effective APR will be higher than the rate entered.
- Does not include taxes or insurance. Mortgage payments, in particular, typically include property tax and insurance escrow. The amount shown here is principal and interest only.
- Standard precision. Results use JavaScript floating-point arithmetic (IEEE 754). Amounts are accurate for estimation but may differ by a few cents from your lender's calculations due to rounding differences.
Related Tools
View all toolsSimple Interest Calculator
Calculate simple interest and total amount
Loan Amortization Schedule
Generate a full payment-by-payment breakdown with principal, interest, and balance
Mortgage Calculator
Estimate mortgage payments and totals
Refinance Calculator
Calculate break-even point on mortgage refinancing and compare monthly savings
Compound Interest Calculator
Calculate compound growth over time
Savings Goal Calculator
Estimate time to reach a savings goal
Loan Calculator FAQ
How is a monthly loan payment calculated?
Monthly payment is calculated using the amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate (annual rate / 12), and n is the total number of monthly payments. If the interest rate is 0%, the payment is simply the principal divided by the number of months.
What is total interest on a loan?
Total interest is the difference between the total amount you pay over the life of the loan and the original principal. Formula: Total Interest = (Monthly Payment x Number of Payments) - Principal. For example, a $20,000 loan at 6% for 5 years has a monthly payment of $386.66, so total paid = $386.66 x 60 = $23,199.36, and total interest = $3,199.36.
How does the interest rate affect monthly payments?
Higher interest rates increase monthly payments and total interest. For example, a $20,000 loan for 5 years at 5% costs $377.42/month ($2,645.48 total interest), while the same loan at 8% costs $405.53/month ($4,331.67 total interest) -- a $1,686 difference in total cost from just 3 percentage points.
How does loan term length affect total cost?
Longer loan terms reduce monthly payments but increase total interest paid. A $20,000 loan at 6%: over 3 years the monthly payment is $608.44 with $1,903.68 total interest, but over 7 years the payment drops to $292.44 while total interest rises to $4,564.82. Shorter terms save money overall; longer terms improve cash flow.
What is loan amortization?
Amortization is the process of repaying a loan through fixed periodic payments that cover both principal and interest. Early payments are mostly interest; later payments are mostly principal. The total payment stays the same each month, but the split between interest and principal shifts over time.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus additional fees and costs (origination fees, closing costs, etc.), expressed as an annual percentage. APR gives a more complete picture of the total borrowing cost. This calculator uses a simple interest rate -- if your loan has fees, the effective APR will be higher.
Can I use this for car loans?
Yes. This calculator works for any fixed-rate amortized loan -- car loans, personal loans, student loans, or home improvement loans. Enter the loan amount (after down payment), the annual interest rate, and the loan term. The result is the monthly payment amount.
Can I use this for mortgages?
This calculator computes the principal and interest portion of a mortgage payment. However, actual monthly mortgage costs usually include property tax, homeowner's insurance, and possibly PMI (private mortgage insurance), which are not included here. For a more complete estimate, see our dedicated mortgage calculator.
Why are early loan payments mostly interest?
Interest is calculated on the outstanding balance. At the start of a loan, the balance is at its highest, so the interest portion of each payment is largest. As you pay down the principal, the balance decreases, less interest accrues each month, and more of each fixed payment goes toward principal. This is how amortization works.
Does this calculator store my data?
No. All calculations run entirely in your browser using JavaScript. No inputs, results, or financial data are sent to any server. Nothing is stored or logged.