How is the monthly loan payment calculated?

The standard amortization formula is used: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal (loan amount), r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. If the interest rate is zero, the payment is simply the principal divided by the number of months.

What is the difference between total payment and total interest?

Total payment is every dollar you repay to the lender over the life of the loan — principal plus all interest. Total interest is only the cost of borrowing: total payment minus the original loan amount. Minimizing total interest means either securing a lower rate or choosing a shorter term.

What does the amortization schedule show?

The year-by-year amortization table breaks each calendar year into principal paid, interest paid, and remaining balance. Early years are interest-heavy because interest accrues on a larger outstanding balance; as the balance shrinks, each payment directs more toward principal.

Should I enter the term in years or months?

Use whichever matches the loan offer. Car loans are often quoted in months (e.g., 60 months), while personal and home-improvement loans are usually quoted in years (e.g., 3 years). Both inputs produce identical results — the calculator converts years to months internally.

Does this calculator account for fees or prepayment penalties?

No. This calculator computes the pure principal-and-interest payment based on a fixed rate and constant term. Origination fees, prepayment penalties, and variable-rate adjustments are not included. Always review your loan agreement for the full cost of borrowing.

Loan Calculator

Enter your loan amount, rate, and term to see monthly payments, total interest, and a full amortization breakdown.

Loan Details

Loan Amount

Annual Interest Rate

Loan Term

Currency Symbol

Fill in the loan details on the left, then click Calculate.

Payment Summary

Fixed-rate amortization

Monthly Payment

—

Loan Amount

—

Total Interest

—

Total Payment

—

Amortization Schedule Year-by-year

Year	Principal Paid	Interest Paid	Remaining Balance

Summary

A loan calculator turns a loan amount, interest rate, and term into a fixed monthly payment using the standard amortization formula. It also totals the interest you pay over the life of the loan and builds a year-by-year schedule showing how each payment splits between principal and interest. Use it for personal, auto, or installment loans before you commit.

How it works

Enter the loan amount you wish to borrow in the Loan Amount field.
Enter the annual interest rate as a percentage (for example, 7.5).
Set the loan term by entering a number and selecting either years or months from the dropdown.
Optionally choose a different currency symbol from the selector.
Click Calculate to see your monthly payment, total interest paid, total repayment, and the full year-by-year amortization table.

Use cases

A borrower comparing a 3-year personal loan at 8% against a 5-year loan at 6.5% to understand the trade-off between monthly payment size and total interest cost.
A car buyer entering the financed amount, dealer APR, and 60-month term to verify the quoted monthly payment before signing.
A small business owner estimating repayment costs on a 24-month equipment loan to decide whether cash flow supports the purchase.
A student exploring how adding extra months to a repayment term reduces monthly payments but increases lifetime interest on a private education loan.

Frequently Asked Questions

Last updated: 2026-05-23 · Reviewed by Nham Vu