Loan Payment Calculator
Enter the amount, rate, and term to see the monthly payment, the total interest over the life of the loan, and how the balance falls each year.
Monthly payment$489.15
- Total interest
- $4,349.22
- Total paid
- $29,349.22
- Number of payments
- 60
Year by year
| Year | Principal paid | Interest paid | Balance |
|---|---|---|---|
| 1 | $4,373.62 | $1,496.23 | $20,626.38 |
| 2 | $4,666.53 | $1,203.32 | $15,959.86 |
| 3 | $4,979.05 | $890.79 | $10,980.81 |
| 4 | $5,312.51 | $557.34 | $5,668.30 |
| 5 | $5,668.30 | $201.55 | $0.00 |
Assumes equal monthly payments and a rate that stays fixed for the whole term.
How to use this calculator
- Enter the loan amount, which is the principal before any interest.
- Enter the yearly interest rate from your loan offer.
- Enter the term in years, then read the monthly payment and total interest.
- Open the year-by-year table to see how much of each year goes to principal versus interest.
How the monthly payment is calculated
A fixed-rate loan is repaid in equal monthly installments. Each payment covers that month's interest on the remaining balance, and whatever is left reduces the balance. Early on, most of the payment is interest; by the end, almost all of it is principal.
The payment comes from the standard amortization formula:
payment = P × r ÷ (1 − (1 + r)^−n)
- P is the amount borrowed.
- r is the monthly rate: the yearly rate divided by 12.
- n is the number of monthly payments: years × 12.
If the rate is zero, the payment is just the amount divided by the number of months.
What changes the payment most
The term has the biggest effect on the monthly amount, and the rate has the biggest effect on the total cost. Stretching a five-year loan to seven years lowers each payment but adds two more years of interest. A rate one point higher on a $25,000 loan over five years costs roughly $700 more in total interest.
What this calculator leaves out
Origination fees, insurance, and taxes are not included. If your offer quotes an APR that is higher than the interest rate, the difference is those fees. Variable-rate loans start at the quoted rate and can move later, so the payment shown only holds while the rate does.
Worked example
Suppose you borrow $25,000 at 6.5% for five years. The monthly rate is 6.5% ÷ 12, about 0.542%, and there are 60 payments. The formula gives a payment of $489.15. Over 60 months you pay $29,349, so the loan costs $4,349 in interest.
Shorten the term to four years and the payment rises to $592.86, but total interest falls to $3,457. The extra $104 a month saves about $890 overall.
Common questions
Is the interest rate the same as the APR?
Not quite. The interest rate is what you pay on the balance. The APR also spreads any upfront fees across the term, so it is usually a little higher. For a quick estimate, either number is close enough; for comparing two offers, use the APR.
Why is my first payment mostly interest?
Interest is charged on the balance you still owe, and at the start you owe the full amount. As the balance falls, the interest part of each payment shrinks and the principal part grows, even though the payment itself stays the same.
What happens if I pay extra each month?
Extra payments go straight to principal, which cuts the interest charged in every later month and shortens the term. This calculator shows the scheduled payments only; paying more will always finish the loan sooner and cost less.
Does this work for a car loan or a mortgage?
Yes. Any fixed-rate loan repaid in equal monthly installments uses the same formula, including auto loans, personal loans, and fixed-rate mortgages. Mortgages usually add taxes and insurance to the monthly bill, which this tool does not include.