Loan Payment Calculator
A loan payment calculator works out the monthly payment, total interest and total cost of a fixed-rate installment loan from three inputs: the loan amount, the annual percentage rate (APR) and the term in years. Enter the amount, rate and term from a lender's offer in the calculator above, replacing the placeholder figures it starts with. Add an optional extra monthly payment to see how much sooner the loan ends and how much interest that extra money saves.
For example, take a $25,000 loan at 8% APR over 5 years. The payment is $506.91 a month, so you pay $30,414.59 in total, and $5,414.59 of that is interest. Adding $100 a month clears the loan 11 months sooner and cuts total interest by $1,089.30.
How it works
The calculator sets your monthly payment with this formula: payment = loan amount × r ÷ (1 − (1 + r)^−n). In that formula, r is the monthly rate, found by dividing the APR by 12, and n is the number of payments, found by multiplying the term in years by 12. On the $25,000 loan from the example above, the formula returns a payment of $506.91 a month.
Each payment first covers a month's interest on the remaining balance, and the rest of the payment reduces principal. The first month's interest on the example loan is $166.67, which is the full $25,000 times the monthly rate at 8% APR. The other $340.24 of the $506.91 payment cuts the balance, so the second month charges interest on a smaller amount and each later payment puts more toward principal.
An extra monthly payment goes straight to principal, and the calculator then reports the new payoff time, the interest saved and the months saved. Adding $100 a month to the example loan pays it off in 49 months instead of 60. Total interest falls from $5,414.59 to $4,325.29, a saving of $1,089.30.
At a 0% rate there is no interest to charge, so the calculator skips the formula and divides the loan amount by the number of payments. Spread over 60 payments, the same $25,000 comes to $416.67 a month. The $90.24 monthly gap between $416.67 and $506.91 is what the interest adds to each payment.
The results assume a fixed rate, equal monthly payments from the first month, and no fees or prepayment penalties. Taxes, insurance and lender fees are left out, so an actual mortgage or car payment runs higher than the figure shown here. For those loans, use the mortgage calculator or the auto loan calculator, and use the personal loan calculator for a personal loan.
Frequently asked questions
How is my monthly loan payment calculated?
The payment equals the loan amount × r ÷ (1 − (1 + r)^−n), where r is the APR divided by 12 and n is the number of monthly payments. Take a $25,000 loan at 8% APR over 5 years. The formula gives a payment of $506.91 a month.
How much is the monthly payment on a $25,000 loan?
The payment is $506.91 a month for a $25,000 loan at 8% APR. That figure assumes a 5-year term of 60 payments. A different rate or term changes the payment, so enter the numbers from your lender's offer in the calculator above.
How much interest will I pay over the life of the loan?
Total interest depends on the amount, rate and term, and the calculator above shows it next to your monthly payment. On the $25,000 example at 8% APR, total interest is $5,414.59. You pay $30,414.59 in total across the 60 payments.
What does an extra monthly payment save?
An extra payment cuts both the payoff time and the total interest, because it goes straight to principal. Adding $100 a month to the $25,000 example ends the loan in 49 months. That saves 11 months and $1,089.30 in interest.
How does amortization split each payment?
Each payment first covers that month's interest on the remaining balance, and the rest reduces principal. On the $25,000 example, the first payment splits into $166.67 of interest and $340.24 of principal. As the balance falls, interest takes a smaller share of each payment and principal takes a larger one.
What if the loan has a 0% rate?
At a 0% rate, the payment is the loan amount divided by the number of payments, and no interest is charged. A $25,000 loan over 60 payments comes to $416.67 a month at that rate. Enter 0 as the APR in the calculator above to see your own figure.
Does the payment include taxes, insurance or fees?
No. The payment covers principal and interest only, with no taxes, insurance or lender fees added. A mortgage or car payment will run higher once those costs are included. The calculator also assumes a fixed rate and no prepayment penalty.
Should I use this or a mortgage, auto or personal loan calculator?
Use this calculator for any fixed-rate installment loan where you know the amount, rate and term. For a home, car or personal loan, the mortgage calculator, auto loan calculator and personal loan calculator each cover that loan type on its own page. To find a tool for another kind of debt, browse all calculators.