Loan Payment Calculator
Enter the amount, rate and term to see the monthly payment, the total interest, and the effect of paying extra.
How the monthly payment is calculated
For a fixed-rate loan, the payment is the same every month. Each payment first covers that month’s interest on the remaining balance, and whatever is left reduces the principal. Early payments are mostly interest, and later ones are mostly principal, which is why the year-by-year table shows interest shrinking over time.
The formula is payment = P × r ÷ (1 − (1 + r)−n), where P is the amount borrowed, r is the monthly rate (APR divided by 12) and n is the number of monthly payments.
Why extra payments help
Any extra amount goes straight to principal. That lowers the balance that interest is charged on, so every later month costs a little less. On a longer loan, even a modest extra payment can cut months or years off the term. Check with your lender that extra payments are applied to principal and that there is no prepayment penalty.
What this calculator does not include
This estimate covers principal and interest only. Mortgages usually add property tax and insurance, and some loans include origination fees, mortgage insurance, or a variable rate that changes the payment. For a binding quote, ask your lender for a loan estimate.
For general information only. This is not financial advice.
Worked example: the same loan over different terms
Here is a $20,000 loan at 6% APR. A longer term lowers the monthly payment but costs more in total interest.
| Term | Monthly payment | Total interest |
|---|---|---|
| 3 years | $608.44 | about $1,904 |
| 5 years | $386.66 | about $3,199 |
| 7 years | $292.17 | about $4,542 |
What an extra payment can do
On the 5-year loan above, adding $50 a month finishes the loan in 53 months instead of 60 and cuts total interest from about $3,199 to about $2,770, a saving of roughly $429. The extra money works because each $50 reduces the balance that interest is charged on for every month that follows.
Interest rate vs. APR
The interest rate is the cost of borrowing the money. The APR (annual percentage rate) also folds in certain fees, so it is the better number for comparing offers. This calculator treats the rate you enter as the rate that determines the payment, so use the rate from your loan estimate and not an advertised “as low as” rate.
Questions to ask before you borrow
- Is the rate fixed or variable, and when can it change?
- Are there origination fees, closing costs or a prepayment penalty?
- Do extra payments go to principal, or are they held for the next due date?
- What is the total I will pay over the life of the loan, not only the monthly payment?
Frequently asked questions
Why is my first payment mostly interest?
Interest is charged on the balance you still owe, which is largest at the start. As the balance falls, a bigger share of the same payment goes to principal.
Should I pick the shortest term I can afford?
A shorter term saves interest, but a payment that strains your budget carries its own risk. Many people choose a longer term and make extra payments when they can, which keeps the required payment lower.
Does this work for car loans and personal loans?
Yes, for any fixed-rate loan that is repaid in equal monthly payments. It is not designed for credit cards, interest-only loans or loans with a variable rate.
For general information only. This is not financial advice.