Loan Calculator
This loan calculator works out the monthly payment on a fixed-rate loan from the amount, interest rate and term, along with the total interest you'd pay and a year-by-year amortization schedule.
Result
$396.02 per month
| Number of payments | 60 (5 years) |
|---|---|
| Total interest | $3,761.44 |
| Total of all payments | $23,761.44 |
Results update as you type.
Amortization schedule (by year)
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $3,462 | $1,290 | $16,538 |
| 2 | $3,712 | $1,040 | $12,826 |
| 3 | $3,981 | $772 | $8,845 |
| 4 | $4,268 | $484 | $4,577 |
| 5 | $4,577 | $175 | $0 |
How a Fixed-Rate Loan Works
A fixed-rate, fully amortizing loan has the same payment every month. Each payment covers that month’s interest first; the rest pays down the balance. Because the balance shrinks, the interest share of each payment falls over time and the principal share grows, until the final payment clears the loan.
The Loan Payment Formula
Monthly payment = P × r ÷ (1 − (1 + r)^−n)
- P = amount borrowed
- r = monthly interest rate = annual rate ÷ 12 (as a decimal)
- n = number of monthly payments = years × 12
At 0% interest the formula simplifies to P ÷ n.
Total interest
Total interest = monthly payment × n − P
Worked Example
Borrowing $20,000 at 7% for 5 years:
- Monthly rate: 0.07 ÷ 12 = 0.0058333
- Number of payments: 5 × 12 = 60
- (1 + r)^−60 = 0.7054
- Payment: 20,000 × 0.0058333 ÷ (1 − 0.7054) = $396.02
- Total paid: 60 × $396.02 = $23,761
- Total interest: $23,761 − $20,000 = $3,761
In the first month, interest is 20,000 × 0.0058333 = $116.67, so $279.35 of the payment goes to principal. By the final year, almost the whole payment goes to principal.
Comparing Terms
| Term | Monthly payment | Total interest |
|---|---|---|
| 3 years | $617.54 | $2,232 |
| 5 years | $396.02 | $3,761 |
| 7 years | $301.85 | $5,356 |
($20,000 at 7%.) Stretching the loan from 5 to 7 years cuts the payment by about $94 a month but adds about $1,595 in interest.
Tips for Using the Calculator
Use the interest rate, not the APR, for the payment
Lenders quote both. The APR includes some fees, so it’s useful for comparing offers, but the monthly payment is based on the note’s interest rate.
Check what’s included
Some loans add fees or insurance to the amount borrowed. Enter the full amount you’ll actually owe at the start.
Extra payments shorten the loan
Paying more than the scheduled amount reduces the balance faster and cuts total interest, as long as the lender applies extra money to principal. Check your loan terms for how extra payments are handled and whether there’s a prepayment penalty.
Related calculators
For home loans with taxes and insurance, use the mortgage calculator. For car purchases with a trade-in and sales tax, use the auto loan calculator. To plan paying off several debts at once, try the debt payoff calculator.
Frequently Asked Questions
How is a monthly loan payment calculated?
For a fixed-rate loan, the payment is P × r ÷ (1 − (1 + r)^−n), where P is the amount borrowed, r is the monthly interest rate (the annual rate divided by 12) and n is the number of monthly payments. A $20,000 loan at 7% for 5 years works out to $396.02 a month.
How much interest will I pay on a loan?
Multiply the monthly payment by the number of payments and subtract the amount borrowed. For $20,000 at 7% over 5 years, that's 60 × $396.02 − $20,000, or about $3,761 in interest.
What is an amortization schedule?
It's a table showing how each payment splits between interest and principal and how the balance falls over time. The CFPB explains that early payments are mostly interest, because the balance is still high, and later payments go mostly to principal.
Does a longer loan term save money?
A longer term lowers the monthly payment but raises the total interest paid, because the balance stays higher for longer. The CFPB makes the same point about auto loans. The calculator shows both numbers so you can compare terms.
What is APR?
The annual percentage rate is the yearly cost of borrowing, including interest and certain fees, expressed as a percentage. This calculator applies the rate you enter as simple monthly interest, so if your lender quotes an interest rate and an APR, use the interest rate for the payment.
Can I enter a term in months?
Yes. Enter the term in years with a decimal, such as 2.5 for 30 months or 0.5 for 6 months. The calculator rounds to whole months.
Related Calculators
- Mortgage CalculatorFull monthly mortgage payment, including taxes, insurance and PMI.
- Auto Loan CalculatorCar payment with trade-in, sales tax and fees included.
- Credit Card Payoff CalculatorMonths to pay off a card balance, or the payment needed to clear it.
- Debt Payoff CalculatorSnowball vs avalanche plan for paying off several debts.
Sources
- Consumer Financial Protection Bureau — What is amortization and how could it affect my auto loan? (how payments split between interest and principal; longer terms mean more interest)
- Standard fixed-rate amortization formula — payment = P × r ÷ (1 − (1 + r)^−n), with r = annual rate ÷ 12.
- Amounts are rounded to cents for display; the final payment is trimmed to the remaining balance.
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