Loan Payment Calculator: Monthly Payment & Amortization
This free calculator shows exactly what a loan costs you. Enter the loan amount, the annual interest rate and the term in years, and it instantly returns your fixed monthly payment, the total interest you will pay, and a year-by-year amortization schedule. It works for personal loans, business loans and any fixed-rate installment loan.
Loan Payment Calculator
How to Use This Calculator
Enter the amount you plan to borrow — the full loan amount, not including any fees. Then enter the annual interest rate as a percentage (for example, 8 for 8%), and pick the loan term in years. The calculator assumes fixed monthly payments starting one month after the loan begins.
Click Calculate and you'll see your monthly payment, the total interest over the whole term, and the grand total you will have repaid. Below that, the amortization table shows each year's split: how much of your payments went to principal, how much to interest, and your remaining balance at the end of each year.
Try changing the term and watching the payment and the total interest move in opposite directions — a longer term lowers the payment but raises the total interest dramatically. Click Reset to start over.
The Formula
The fixed monthly payment comes from the standard amortization formula: M = P × i × (1 + i)ⁿ ÷ ((1 + i)ⁿ − 1), where P is the loan amount, i is the monthly interest rate (annual rate ÷ 12), and n is the number of months (years × 12).
Each month, the interest portion of the payment is the current balance times i, and everything left over goes to principal — which is why the balance falls faster in the final years of the loan.
Worked example: a $25,000 loan at 8% for 5 years. The monthly rate is 0.08 ÷ 12 = 0.006667, and there are 60 payments. Plugging in the numbers gives a monthly payment of about $506.91. Over 60 payments the total repaid is $30,414.63, so the total interest is $30,414.63 − $25,000 = $5,414.63.
Tips
When comparing loan offers, compare the total interest and any fees — not just the monthly payment. A longer term always lowers the payment, but it can add thousands in interest, so pick the shortest term you can comfortably afford.
If your budget allows, pay a little extra each month. Because every extra dollar goes straight to principal, even $25 extra per month on the example above would pay the loan off early and save roughly $300 in interest. Just confirm the lender has no prepayment penalty first.
Frequently Asked Questions
How is a loan payment calculated?
A loan payment is calculated with the amortization formula: M = P × i × (1 + i)^n ÷ ((1 + i)^n − 1), where M is the monthly payment, P is the loan amount, i is the monthly interest rate (annual rate divided by 12), and n is the number of months. This formula gives the fixed payment that pays off the loan exactly at the end of the term.
What is amortization?
Amortization is how each fixed payment is split between interest and principal. In the early months, most of the payment goes to interest and only a little reduces the balance; over time the interest portion shrinks and the principal portion grows, until the balance reaches zero at the end of the term.
How does the interest rate affect my payment?
The interest rate is the biggest factor in the total cost of a loan. For example, on a $25,000 five-year loan, raising the rate from 6% to 8% adds roughly $1,400 to the total interest paid. Always compare the total interest, not just the monthly payment, when shopping for a loan.
What happens if I make extra payments?
Extra payments go straight to principal, which reduces the balance that future interest is charged on. A small consistent overpayment — even $25 a month — can shorten the loan term by months and save hundreds in interest, as long as the lender has no prepayment penalty.
What is the difference between the interest rate and the APR?
The interest rate is the basic yearly cost of borrowing, while the APR (annual percentage rate) also includes most fees and charges, such as origination fees. Because of this, the APR is usually higher than the interest rate and is the better number for comparing two loans.