How this loan payment calculator works

The calculator uses the standard amortization formula that banks and lenders use for fixed-rate loans with equal monthly payments:

M = P × i ÷ (1 − (1 + i)⁻ⁿ)

• M is your monthly payment.
• P is the loan amount (the principal).
• i is the monthly interest rate, which is the annual rate divided by 12.
• n is the total number of monthly payments (years × 12, plus any extra months).

If the interest rate is 0%, the payment is simply the loan amount divided by the number of months. The yearly breakdown below the result shows how much of your payments in each year go toward principal and how much goes toward interest, and what balance remains at the end of that year.

How to use the calculator

1. Type the loan amount you want to borrow.
2. Enter the annual interest rate as a percentage, for example 6.5.
3. Enter the loan term in years, and add extra months if needed (for example 5 years and 6 months).
4. Choose a currency symbol if you like. It only changes how the numbers are displayed.
5. Press Calculate to see your monthly payment, total cost and yearly breakdown.

Using the extra payment option

Type an amount into the optional extra monthly payment box to see how paying a little more each month changes your loan. The calculator shows how much interest you save and how many months or years sooner you will be debt-free. Even a small extra amount, applied to the principal every month, can take years off a long loan.

Worked example

Suppose you borrow $250,000 at 6.5% for 30 years. The monthly interest rate is 0.065 ÷ 12 = 0.5417%, and there are 360 payments. The calculator gives:

• Monthly payment: $1,580.17
• Total of all 360 payments: $568,861.22
• Total interest paid: $318,861.22

Now take the same loan over 15 years. The monthly payment rises to $2,177.77, but the total interest falls to $141,998.31. That is about $176,863 less interest in exchange for a payment roughly $598 higher each month. A shorter term costs more per month but far less overall.

The interest rate matters just as much. On the same $250,000 and 30 years, a rate of 5.5% instead of 6.5% lowers the payment to $1,419.47, saving about $160 a month and roughly $57,851 in interest over the life of the loan.

Why early payments are mostly interest

With an amortizing loan, each month’s interest is calculated on the balance that is still owed. At the start the balance is at its highest, so most of your payment goes to interest and only a small part reduces the principal. As the balance falls, the interest part shrinks and the principal part grows. You can see this clearly in the yearly breakdown: the first year shows a large interest figure, and the last year shows mostly principal.

Ways to reduce the total interest you pay

• Choose a shorter term. You pay more each month but much less interest overall.
• Make a larger down payment. Borrowing less lowers both the payment and the interest.
• Compare lenders. Even a difference of half a percentage point can save thousands over a long loan.
• Pay a little extra when you can. Extra money applied to principal shortens the loan and cuts interest. Check with your lender that extra payments go to principal and that there is no prepayment penalty.
• Improve your credit profile. A stronger credit history can qualify you for a lower rate.
• Consider refinancing if market rates drop well below your current rate, after weighing the fees.

Which loans can I use this calculator for?

It works for any loan with a fixed interest rate and equal monthly payments, including home loans, car loans, personal loans, student loans and business term loans. It is not designed for adjustable-rate loans, interest-only loans, balloon payments or revolving credit such as credit cards, where the payment and balance change from month to month.

How loan term and interest rate change what you pay

The two inputs that shape the cost of a loan most are the length of the term and the interest rate. A longer term lowers the monthly payment, but you pay interest for more months, so the total cost rises sharply. The table below shows a $250,000 loan at 6.5% for three common terms.

Loan term	Monthly payment	Total interest
15 years	$2,177.77	$141,998.31
20 years	$1,863.93	$197,343.88
30 years	$1,580.17	$318,861.22

The interest rate has a similar effect. The next table keeps the loan at $250,000 for 30 years and changes only the rate. Each extra percentage point adds roughly $153 to $168 to the monthly payment and tens of thousands of dollars to the total interest.

Interest rate	Monthly payment	Total interest
4.5%	$1,266.71	$206,016.78
5.5%	$1,419.47	$261,010.10
6.5%	$1,580.17	$318,861.22
7.5%	$1,748.04	$379,293.06

Because rates can differ between lenders, comparing several offers is one of the easiest ways to save money. Try different rates in the calculator above to see the effect on your own loan.

Typical loan terms by loan type

• Home loans (mortgages): most commonly 15 or 30 years.
• Auto loans: often 36 to 84 months, with 60 to 72 months very common.
• Personal loans: usually a few years, often between two and seven.
• Federal student loans: the standard repayment plan is 10 years, and other plans can be longer.
• Business term loans: vary widely depending on the lender and the purpose.

Car loans show the trade-off clearly. Here is a $30,000 loan at 7% with different terms:

Loan term	Monthly payment	Total interest
48 months	$718.39	$4,482.59
60 months	$594.04	$5,642.16
72 months	$511.47	$6,825.85
84 months	$452.78	$8,033.55

Going from 48 to 84 months lowers the payment by about $266 a month, but it adds roughly $3,551 in interest. A very long car loan can also leave you owing more than the car is worth for several years, so many buyers prefer the shortest term they can comfortably afford.

Fixed-rate loans and adjustable-rate loans

A fixed-rate loan keeps the same interest rate for the whole term, so the principal and interest payment never changes. This is the kind of loan this calculator is built for. An adjustable-rate loan starts with one rate and can change later, which means your payment can rise or fall. If you are considering an adjustable-rate loan, ask the lender how often the rate can change, how high it can go and what your payment could be in the worst case.

How much loan can you afford?

Lenders look at your income, your existing debts and your credit history. A traditional rule of thumb is the 28/36 guideline: housing costs should stay under about 28% of your gross monthly income, and all monthly debt payments together under about 36%. For example, with a gross income of $6,000 per month, 28% is $1,680. This is only a guideline, and your own budget, savings and other goals matter just as much. Before you borrow, also think about taxes, insurance, maintenance and an emergency fund.

Common mistakes when comparing loans

• Looking only at the monthly payment. A low payment can hide a long term and a high total cost.
• Ignoring fees. Origination fees, closing costs and insurance change the real cost of borrowing.
• Not shopping around. Asking several lenders for written offers lets you compare the rate, fees and terms side by side.
• Forgetting prepayment rules. Some loans charge a fee if you pay early, which can cancel out the benefit of extra payments.
• Borrowing the maximum. Being approved for a large amount does not mean the payment fits comfortably in your budget.

Key loan terms explained

• Principal: the amount you borrow, before interest.
• Interest rate: the yearly percentage the lender charges for the loan.
• APR: the annual percentage rate, which includes certain fees as well as interest.
• Term: the length of time you have to repay the loan.
• Amortization: paying off a loan with regular payments that cover both interest and principal.
• Escrow: an account some mortgage lenders use to collect and pay your property taxes and insurance.
• Prepayment penalty: a fee some lenders charge when you pay a loan off early.

Helpful resources

These independent sources explain loans and mortgages in more detail:

• Loan Estimate Explainer (Consumer Financial Protection Bureau): a plain-language guide to reading a mortgage Loan Estimate.
• How does paying down a mortgage work? (Consumer Financial Protection Bureau): how early payments are split between interest and principal.
• Compound Interest Calculator on this site: see how saving regularly can grow over time.

Frequently asked questions

Does this calculator include taxes, insurance or fees?

No. It calculates principal and interest only. For a mortgage, your real monthly cost may also include property tax, homeowners insurance, mortgage insurance and association fees. For other loans, origination fees and add-on products can raise the true cost.

Is my information saved or sent anywhere?

No. All calculations happen in your web browser. The numbers you type are not sent to our servers and are not stored.

Why is my lender’s payment slightly different?

Lenders may round differently, use a different day-count method for the first payment, or add fees and insurance. Small differences of a few cents or dollars are normal, so always rely on your official loan documents for exact figures.

What is the difference between interest rate and APR?

The interest rate is the cost of borrowing the principal. The APR (annual percentage rate) also includes certain fees and is meant to show the broader yearly cost. This calculator uses the interest rate you enter, so enter your note rate rather than the APR to match your monthly payment.

Can I calculate a loan shorter than one year?

Yes. Leave the years box empty (or enter 0) and type the number of months in the extra months box, for example 8 months.

This calculator is for general information and planning only and is not financial advice. See our Terms & Disclaimer for details.