Loan Payment Calculator
This free calculator estimates the fixed monthly payment on an amortizing loan. Enter the loan principal, the annual interest rate, and the repayment term in years — the calculator returns your estimated monthly payment and the total interest you will pay over the life of the loan. It works for personal loans, auto loans, student loans, and other fixed-rate installment loans. For home loans specifically, use the Mortgage Calculator.
How It Works
This is the standard amortization formula, where:
- M = monthly payment
- P = principal (the original loan amount)
- r = monthly interest rate = annual rate ÷ 12 (expressed as a decimal, so 6% becomes 0.06 ÷ 12 = 0.005)
- n = total number of monthly payments = years × 12
The formula spreads both principal and interest across equal payments so the loan balance reaches exactly zero at the end of the term. Early payments in an amortizing loan are weighted toward interest; later payments shift toward principal. If the interest rate is zero, the payment simplifies to principal divided by the number of months.
Worked Examples
Example 1 — personal loan. Principal: $20,000. Rate: 6% per year. Term: 5 years. Monthly rate r = 0.005. n = 60. M = 20,000 × 0.005 × (1.005)⁶⁰ ÷ ((1.005)⁶⁰ − 1) = $386.66 per month. Total interest: about $3,199.
Example 2 — auto loan. Principal: $35,000. Rate: 7.5% per year. Term: 6 years. Monthly rate r ≈ 0.00625. n = 72. M ≈ $610.45 per month. Total interest: about $8,952.
Example 3 — zero interest promo. Principal: $2,400. Rate: 0%. Term: 2 years. Payment = $2,400 ÷ 24 = $100.00 per month. Total interest: $0.
When to Use This Calculator
Use this calculator when:
- Comparing loan offers: Two lenders quote different rates or terms. Enter each scenario to see the monthly payment and total cost side by side.
- Checking affordability: Before applying, estimate whether the monthly payment fits your budget.
- Evaluating the cost of borrowing: Seeing the total interest paid over the loan life shows the true cost of financing rather than just the headline rate.
- Modeling early payoff: Enter a shorter term to see how much you save in interest by paying off a loan faster.
Frequently Asked Questions
What is an amortizing loan?
An amortizing loan is one where equal periodic payments cover both interest and principal so the balance reaches zero at the end of the term. Each payment in the early months covers mostly interest; over time, the share going to principal grows.
Does this calculator include fees?
No. It calculates principal and interest only. Origination fees, late payment fees, insurance, or other lender charges are not included. The total cost of a loan may be higher than the interest shown here.
What is the APR versus the interest rate?
The interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus fees, expressed as an annual rate. This calculator uses the interest rate. Using the APR would produce a slightly higher payment estimate that accounts for fees.
Can I use this for a student loan?
Yes, for standard fixed-rate student loans. Income-driven repayment plans for federal student loans use different formulas and are not covered here.