Loan Payment Calculator
The Loan Payment Calculator works out the fixed monthly payment for any amortizing loan — personal, auto, student or home — from the amount borrowed, the interest rate and the term in months. It also shows total interest and total cost.
What this means
Each month you pay the same amount: part covers the interest accrued that month, and the rest reduces the principal. As the balance falls, the interest share shrinks and more of each payment goes to principal.
How we calculate it
Formula
M = P × [ r(1 + r)^n ] / [ (1 + r)^n − 1 ] — where P is the principal, r is the monthly rate and n is the number of months.Worked example
A $25,000 loan at 5% for 60 months:
- 1Monthly rate = 5% / 12 = 0.4167%
- 2Payment = $25,000 × [0.004167 × (1.004167)^60] / [(1.004167)^60 − 1]
- 3Monthly payment ≈ $471.78, total interest ≈ $3,306.85
Important assumptions
- The interest rate is fixed for the full term.
- Payments are made at the end of each month without interruption.
- No fees, taxes or prepayment penalties are included.
Frequently asked questions
How is a loan payment calculated?
Using the standard amortization formula, which spreads the loan across equal payments so that each covers the month's interest plus part of the principal, ending with a zero balance.
What is a good personal loan rate?
Rates vary with creditworthiness and market conditions; lower rates mean significantly less total interest. Always compare the APR rather than just the monthly payment.
How does loan term affect interest?
Longer terms lower the monthly payment but charge interest for more months, raising the total interest. Shorter terms cost more per month but much less in total.