Loan payment calculator
Enter a loan amount, annual interest rate and term to get the fixed monthly payment and the total interest you will pay over the life of the loan.
Assumes a fixed rate and monthly payments; fees and insurance are not included.
How this calculator works
A fixed-rate loan splits every payment into two parts: interest on the balance that is still outstanding, and principal that reduces the balance. Because interest is charged on a shrinking balance, the interest portion is largest in the first payment and falls slowly, while the principal portion grows. The monthly amount stays identical for the whole term — that is the point of a fixed-rate loan — but the mix inside each payment changes every month.
This calculator solves the standard amortisation formula directly, so it works for personal loans, car finance, a mortgage or any other fully amortising loan where the rate never changes. It assumes payments are made monthly and at the end of each month.
The formula
For loan principal P, monthly interest rate r (annual APR ÷ 12 ÷ 100) and n monthly payments, the fixed payment M is:
M = P · r · (1 + r)^n / ((1 + r)^n − 1)Total repaid is simply M × n, and total interest is that total minus the amount borrowed. When the rate is 0% the formula reduces to P / n.
Worked example
With the default numbers a 20,000 loan at 8% over 5 years costs $405.53 a month. Across the term that is $24,331.67 repaid, of which $4,331.67 is interest — the difference between the price of the loan and its balance.
Common mistakes
- Using the APR as a monthly rate. A 8% APR is about 0.667% per month. Feeding 8 straight into the formula overstates the payment by roughly twelve times.
- Ignoring fees. Origination fees and insurance are not in the payment formula. Add them to the amount borrowed to see their true cost.
- Comparing payments only. A longer term lowers the payment but raises total interest. Compare the total repaid column, not just the monthly figure.
Frequently asked questions
What is a good interest rate for a personal loan?
It depends on your credit profile, loan amount and term. In the US, well-qualified borrowers typically see single-digit APRs on unsecured personal loans, while rates above the mid-teens usually signal a higher-risk profile or a very small loan. Compare at least three offers and look at the APR, which includes fees, not just the headline rate.
Does paying early reduce the interest?
Yes. Interest is charged on the outstanding balance, so any extra principal payment removes interest from every later payment. On this calculator, total interest assumes the minimum payment for the full term; extra payments shorten the loan and cut the total.
What is the difference between APR and interest rate?
The interest rate is the cost of the borrowed money. The APR also folds in most upfront fees, so it is usually slightly higher and is the better number for comparing offers.
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