Loan Payment Calculator
Calculate monthly payments and total interest for any loan
Enter values to see results
Fill in the form and click Calculate
How to Use This Calculator
Enter your loan amount, annual interest rate (APR), and loan term. Select whether your term is in years or months. The calculator will show your monthly payment, total amount paid over the life of the loan, and total interest charges.
Understanding Loan Payments
Most loans use amortization, meaning each payment covers both principal and interest. Early payments are mostly interest, while later payments are mostly principal.
- Principal: The original amount borrowed
- Interest: The cost of borrowing money
- APR: Annual Percentage Rate, the true yearly cost
- Term: The length of time to repay the loan
The Loan Payment Formula
PMT = P × [r(1+r)n] / [(1+r)n - 1]
- PMT = Monthly payment
- P = Principal (loan amount)
- r = Monthly interest rate (APR ÷ 12)
- n = Total number of payments
Frequently Asked Questions
How is my monthly loan payment calculated?
Your monthly payment is calculated using the loan amortization formula, which factors in the principal amount, interest rate, and loan term. The formula ensures equal payments throughout the loan term while covering both principal and interest.
What is APR vs interest rate?
APR (Annual Percentage Rate) includes the interest rate plus any fees or costs associated with the loan, giving you the true yearly cost of borrowing. The interest rate is just the cost of borrowing the principal.
Should I choose a shorter or longer loan term?
A shorter loan term means higher monthly payments but less total interest paid. A longer term means lower monthly payments but more interest over time. Choose based on your budget and how quickly you want to be debt-free.
How can I pay off my loan faster?
You can pay off your loan faster by making extra payments toward the principal, making bi-weekly payments instead of monthly, or refinancing to a shorter term if you can afford higher payments.