Loan Payment Calculator – Amortization Tool
A loan calculator is a financial tool that computes the fixed monthly payment required to fully amortize a debt over a specified term using the standard annuity formula. It factors in the principal balance, annual interest rate, and repayment period to produce a payment schedule showing principal and interest portions. Borrowers use it to compare loan offers and understand the total cost of borrowing.
Enter the loan amount, annual interest rate, and term, then optionally add an extra monthly payment. This loan payment calculator estimates your monthly payment, total interest, and payoff time for a fixed-rate, fully amortizing loan.
Quick Answer
Calculate your monthly loan payment, total interest, and payoff schedule. Enter the loan amount, interest rate, and term to see a full amortization breakdown.
The principal you are borrowing. · e.g. 10,000
The loan's interest rate, not its APR. APR can also include lender fees, so it is usually the higher number. · e.g. 8
e.g. 5
Leave blank for none. The calculator adds this amount to each scheduled payment, which reduces the remaining balance faster. · e.g. 0
Estimated monthly payment
$202.76
Over 5 years at 8% annual interest
Examples
$10,000 at 8% annual interest for 5 years
≈ $202.76/mo · $2,165.84 interest
Same loan + $50/mo extra payment
≈ 47 mo payoff · saves $518 interest
$20,000 at 6% annual interest for 4 years
≈ $469.70/mo · $2,545.63 interest
How it works
The calculator uses the standard amortized loan payment formula. Each month, interest accrues on the remaining balance at the annual interest rate ÷ 12, and your payment covers that interest plus a slice of principal. Over the term, the principal balance is paid down to zero. Enter the loan's interest rate rather than its APR: APR can also include lender fees, which this model does not represent. The rate is treated as a nominal annual rate with monthly compounding, so the monthly rate is the annual rate divided by 12 rather than an effective-annual conversion.
Monthly loan payment
M = P × r × (1 + r)^n / ((1 + r)^n − 1)
The parts
- M = monthly payment
- P = loan amount (principal)
- r = monthly interest rate (annual interest rate ÷ 12 ÷ 100)
- n = number of monthly payments
At a 0% interest rate
M = P / n
What is a loan calculator?
Use this loan payment calculator to estimate the monthly payment and total interest on a fixed-rate, fully amortizing loan. From the loan amount, annual interest rate, and term it computes the scheduled payment, the total of payments, total interest, and payoff time. It fits personal loans, auto loans, and other fixed-rate installment debts that are repaid in equal monthly payments.
How the loan calculator works
Enter the loan amount, the annual interest rate, and the loan term (months or years). The calculator computes:
- The scheduled monthly payment from the amortization formula.
- Total of payments and total interest over the full term.
- The payoff time in years and months.
- If you add an extra monthly payment, a new payoff time, total interest, and the time and interest saved.
Interest rate, APR, and loan term
These are two different numbers. The CFPB defines the interest rate as what you pay the lender for borrowing, and describes APR as “the interest rate plus any additional fees charged by the lender,” including origination charges. Because APR can carry fees that are not part of the monthly interest calculation, this calculator asks for the interest rate. APR is designed to make cost comparisons easier, and the CFPB advises comparing APRs with APRs rather than against interest rates. It also cautions against judging a loan on APR alone, since term, loan amount, and how long you keep the loan all matter.
For the same loan amount and interest rate, a longer term lowers the monthly payment and increases total interest, while a shorter term raises the monthly payment and reduces total interest.
To compare two rate or term scenarios in percentage terms, try the percentage increase calculator.
Principal vs interest
Principal is the amount you actually borrowed. Interest is what the lender charges to lend it to you. Each payment is split between the two. Early in the loan, the balance is large, so most of the payment goes to interest. As the balance shrinks, more of each payment goes to principal. This is why extra payments early in the loan save more interest than the same payment late in the loan.
Extra monthly payments
The calculator simulates the loan month by month with your scheduled payment plus the extra amount. Each month interest accrues on the balance first, the combined payment covers that interest, and the remainder reduces principal — so a larger payment retires the balance sooner. It reports the new payoff time, total interest, and the time and interest saved compared to the base schedule. That is this model's assumption. Whether a real servicer credits additional money to principal, to future scheduled payments, or to fees depends on the loan agreement and on the instructions you give, so confirm with your servicer.
Amortization explained
Amortization just means each payment is split between interest and principal so that the loan reaches zero on the last scheduled payment. The interest portion is calculated from the current balance and the monthly rate, and the rest of the payment goes to principal. The split shifts steadily from mostly interest to mostly principal across the term.
Worked example
Loan amount $10,000, annual interest rate 8%, term 5 years (60 months), no extra payment.
- Monthly payment ≈ $202.76
- Total of payments ≈ $12,165.84
- Total interest ≈ $2,165.84
- Payoff time = 5 years
Add an extra $50 per month on top of the scheduled payment:
- Payoff time with extra ≈ 47 months (about 3 years 11 months)
- Total interest with extra ≈ $1,647.65
- Months saved ≈ 13
- Interest saved ≈ $518.18
Common mistakes
- Entering APR where the interest rate belongs. On a loan with origination or broker fees the two differ, and the monthly rate this formula needs comes from the interest rate.
- Comparing terms on the monthly payment alone. A longer term lowers the payment and raises the total interest paid over the life of the loan.
- Forgetting that an extra payment only helps if it actually exceeds the interest that accrues that month. Tiny extra amounts on very high-rate balances barely move the payoff.
- Mixing the term unit. 60 months and 5 years are the same; 60 years would never be the intent. Use the unit toggle to stay clear.
- Treating this loan estimate as a final offer. Lenders also consider fees, credit profile, and loan type.
Specific Loan Calculators
The calculator above handles any standard loan with fixed monthly payments. For loan types with unique structures — adjustable rates, interest-only periods, or different repayment terms — use the dedicated calculators below.
Related tools
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- Mortgage calculator for home loans with principal, interest, taxes, insurance, PMI, and HOA.
- Mortgage refinance calculator to compare current vs refinance with break-even months.
- Debt-to-income calculator for the ratio lenders use alongside payment math.
- Interest only loan calculator for the math behind interest only payments, which do not reduce the principal balance.
- Car payment calculator for auto loans with sales tax, trade in, and down payment.
- Simple interest calculator for the underlying I = P × r × t math that some short notes and promotional loans use instead of amortized interest.
- Credit card payoff calculator for revolving balances with variable payments.
- Roth IRA calculator for projecting a long-term savings balance.
- Percentage increase calculator for comparing rates and prices.
- How to calculate loan interest walks through simple interest, interest only, and amortizing interest math in one place.
- APR vs interest rate explains why APR can be higher than the interest rate and which number to use when comparing loans.
- Interest only vs amortizing loan compares the two payment styles and what happens after the interest only period.
What this calculator assumes
- A fixed interest rate, equal monthly payments, and a loan that fully amortizes to zero on the last scheduled payment.
- Interest accrues once per month on the outstanding balance. It does not model daily simple-interest accrual.
- No fees. Origination, broker, or other charges are not included in the payment, which is one reason the figure here can differ from a quoted APR.
- A whole number of monthly payments. Adjustable rates, balloon payments, interest-only periods, and irregular payment schedules are outside this model.
- Full precision throughout, with rounding only for display. The totals come from the unrounded payment, so multiplying the displayed monthly figure by the number of payments can differ by a few cents. A lender that bills a cent-rounded payment will adjust the final instalment instead.
Sources
- CFPB — the difference between a loan's interest rate and its APR — states that the APR is the interest rate plus additional lender fees such as origination charges, and that APRs should be compared with APRs. This is why the input above asks for the interest rate.
- CFPB — what is included in a monthly mortgage payment — gives the total payment as principal plus interest plus mortgage insurance if applicable plus escrow for homeowners insurance and taxes, and notes that homeowners-association fees are usually paid separately. This supports the mortgage qualification in the FAQ.
Disclaimer. This calculator is an estimate for general educational use. Actual loan terms, rates, fees, payoff rules, and payment schedules can vary by lender, credit profile, and loan type. The calculator is not a loan offer or approval and is not financial advice.