Loan Calculator
Calculate monthly payments and total interest for any loan.
Before taking out a loan for a car, home, or personal expense, understanding your monthly payment and total interest cost is essential. This loan calculator uses the standard amortization formula to show you exactly how much you will pay each month and the total cost of the loan over its lifetime. You can compare different loan terms and interest rates to find the best option for your budget.
How to use this tool
- Enter the total loan amount (principal).
- Enter the annual interest rate as a percentage (e.g. 6.5).
- Enter the loan term in months or years.
- The monthly payment and total interest are calculated immediately.
Frequently asked questions
How is a monthly loan payment calculated?
The standard formula is M = P[r(1+r)^n]/[(1+r)^nā1], where P is the principal, r is the monthly interest rate (annual rate / 12), and n is the number of months. This calculator handles the math for you.
What is amortization?
Amortization is the process of paying off a loan through regular payments. Early payments go mostly toward interest; later payments go mostly toward the principal. This is why you pay more interest on longer loans.
Does a longer loan term mean lower payments?
Yes ā spreading payments over more months reduces each monthly payment, but you pay significantly more interest in total. A 5-year loan at 6% will cost much more in interest than a 3-year loan at the same rate.
What is APR?
APR (Annual Percentage Rate) includes the interest rate plus any additional fees charged by the lender, expressed as a yearly rate. It is usually higher than the stated interest rate and gives a more accurate picture of the loan cost.