Loan Calculator
Find the monthly payment of a fixed-rate loan, the total interest you will pay and how the balance falls year by year. Add an extra monthly payment to see how many months and how much interest you save.
Result
Enter the loan amount, the rate and the term.
The calculation runs in this browser tab. Nothing you enter is uploaded, saved or logged.
How is a loan payment calculated?
A standard (amortising) loan is repaid in equal monthly payments. Each payment first covers the interest on the balance, and the rest reduces the balance. At the start the balance is high, so most of the payment is interest; as the balance falls, more of each payment goes to principal. The payment is set so that the balance reaches exactly zero at the end of the term.
On a 25,000 loan at 6.5% over 5 years, the payment is 489.15 a month. Over 60 months that is 29,349.20, so the loan costs 4,349.20 in interest. An extra payment of 100 a month goes entirely to principal, so the balance falls faster, interest is charged on a smaller balance, and the loan ends 11 months early.
How to use the Loan Calculator
- Enter the amount borrowed and the yearly interest rate.
- Enter the term in years and, if needed, extra months.
- Optionally enter an extra amount you will pay every month on top of the regular payment.
- Read the monthly payment, the total interest and the total paid, and use the table to follow the balance year by year.
Formula
- Monthly rate
- i = annual rate ÷ 12
- Monthly payment
- M = P × i ÷ (1 − (1 + i)^−n)
- Interest each month
- interest = balance × i
- Principal each month
- principal = payment − interest
Here P is the amount borrowed and n the number of monthly payments. With a rate of 0 the payment is simply P ÷ n.
The payment is rounded to the cent, as are the interest of each month. The last payment is adjusted to clear the balance exactly, which is why it can differ by a few cents from the others.
Worked example
A 25,000 loan at 6.5% over 5 years. These are the results the calculator gives:
| Question | Result |
|---|---|
| Input: Loan amount | 25000 |
| Input: Annual interest rate | 6.5 % |
| Input: Term – years | 5 |
| Monthly payment | 489.15 |
| Total interest | 4,349.20 |
| Total paid | 29,349.20 |
| Number of payments | 60 |
| Interest as a share of the loan | 17.4% |
Assumptions and limits
- The loan is assumed to have a fixed rate, equal monthly payments at the end of each month and interest of one twelfth of the annual rate every month. Your lender may use another convention, and the figures in your contract prevail.
- The rate is the nominal interest rate. The annual percentage rate (APR) quoted by lenders also includes fees and is higher, so it should not be entered here unless you want the cost it implies.
- Fees, insurance, early-repayment charges and changes of rate are not included.
- Terms are limited to 50 years, and the rate to 100%. These results are a calculation from the numbers you enter, not financial advice.
Frequently asked questions
How do I calculate a monthly loan payment?
Use M = P × i ÷ (1 − (1 + i)^−n), where P is the amount borrowed, i the monthly rate (annual rate ÷ 12) and n the number of payments. For 25,000 at 6.5% over 60 months that gives 489.15.
How much interest will I pay in total?
The total of all payments minus the amount borrowed. For 25,000 at 6.5% over 5 years you pay 29,349.20 in total, of which 4,349.20 is interest, about 17% of the loan.
Why is so much of the early payments interest?
Interest is charged on the outstanding balance, which is highest at the start. Each payment covers the month’s interest first, so early payments reduce the balance slowly. The table shows the shift year by year.
What does an extra payment do?
It goes straight to principal, which lowers the balance and so the interest charged in every later month. An extra 100 a month on this loan ends it 11 months early and saves 865.40 of interest.
What is the difference between the interest rate and the APR?
The interest rate is the cost of borrowing the money. The APR also includes fees and other charges, so it is higher and better for comparing loan offers. This calculator uses the nominal rate you enter.
Why is my lender’s payment slightly different?
Lenders can compute interest daily, round at other points, or have a first period of different length. The calculator assumes monthly interest of one twelfth of the annual rate. Check the contract for the exact figures.