Enter loan amount, annual rate, and term to estimate monthly payment, total paid, and total interest.
Calculate loan payments
Use fixed monthly payments. Fees, taxes, and lender-specific terms are not included.
Important Finance Disclaimer
This calculator is for estimates only and educational purposes. It does not constitute financial, investment, loan, tax, legal, accounting, or other professional advice. Always verify important decisions with a qualified professional and the relevant lender, advisor, tax authority, or service provider.
Inputs, units, and periods
The loan amount is treated as the borrowed principal before fees or down payments.
The annual interest rate is divided by 12 for monthly payments. A disclosed APR may also include fees and is not a substitute for this input.
The loan term is entered in years and converted to monthly payments.
Payments are estimated as fixed, equal monthly installments.
Items not included
Origination fees, closing costs, insurance, taxes, late fees, and prepayment penalties.
Credit qualification, approval odds, escrow rules, or payoff schedule changes.
Actual loan costs can differ because of lender fees, APR disclosures, compounding rules, payment timing, taxes, insurance, escrow requirements, and the exact terms in your loan agreement.
What is a Loan Payment?
A loan payment is the regular amount paid back to a lender over time. For a standard fixed-rate installment loan, each payment includes part of the original loan amount and part of the interest charged by the lender.
The monthly payment is designed so the loan balance reaches zero at the end of the term, assuming the interest rate and payment schedule stay the same.
How Loan Payments Are Calculated
Follow these detailed steps:
Step 1: Identify Your Variables
Gather the loan principal (P), annual interest rate, and term in years. Convert the annual rate to a monthly decimal rate and convert years to months.
Step 2: Apply the Payment Formula
Use M = P x [r(1+r)^n] / [(1+r)^n - 1], where r is the monthly rate and n is the number of monthly payments.
Step 3: Calculate Total Interest
Multiply the monthly payment by the number of payments, then subtract the principal to estimate total interest.
Formula
M = P x [r(1+r)^n] / [(1+r)^n - 1]
Where: M = monthly payment, P = loan amount, r = monthly interest rate as a decimal, n = total number of monthly payments.
Example
Fixed-Rate Loan Example
Problem: You borrow $10,000 at 6% annual interest for 3 years. What is the estimated monthly payment?
Solution:
Principal: $10,000, annual interest rate: 6%, Time: 3 years, n = 36 monthly payments
Monthly rate: 6% / 12 = 0.5% = 0.005
Formula: M = 10,000 x [0.005(1.005)^36] / [(1.005)^36 - 1]
Result: M = $304.22
Total interest: unrounded monthly payment x 36 - $10,000 = $951.90. The monthly payment is displayed as $304.22; multiplying that rounded display gives $951.92 instead. Lender payment rounding may adjust the final installment.
Quick Calculation Tips
Shorter terms usually raise the monthly payment but reduce total interest.
Compare APR and fees, not only the headline interest rate.
Use the same term length when comparing different loan offers.
Round the final payment up slightly when planning a budget buffer.
Common Mistakes to Avoid
Comparing monthly payment only A longer term can make the monthly payment look smaller while increasing total interest.
Leaving fees out of the decision Origination fees, closing costs, and insurance can change the real cost even when the rate looks good.
Frequently Asked Questions
Why does a longer term cost more?
You pay interest for more months. The monthly payment may fall, but the total interest usually rises.
Does this include loan fees?
No. Add origination fees, closing costs, insurance, taxes, or lender charges separately when comparing offers.
What happens if the rate is 0%?
A 0% loan is simply the principal divided by the number of payments. The calculator handles that case directly.