Loan Payment Calculator
Calculate monthly loan payments for any type of loan. See total interest and payoff timeline.
Loan Payment Calculator
How the Calculation Works
Formula: Monthly Payment = [Loan Amount × (Interest Rate / 12) × (1 + Interest Rate / 12)^(Months)] / [(1 + Interest Rate / 12)^(Months) - 1]
This is the standard amortization formula used by banks and lenders. It calculates the fixed monthly payment required to fully pay off a loan over your specified term at your interest rate.
Key Calculation: Your interest rate is divided by 12 for monthly calculations. Each month, interest is calculated on your remaining balance, and the rest of your payment goes toward principal.
Worked Example
Example: A $15,000 loan at 7% annual interest for 5 years (60 monthly payments), assuming a fixed rate, monthly payments, and no fees.
- Monthly payment: $297.02
- Total paid: $17,821.08
- Total interest: $2,821.08
For a 3-year term at the same rate, the monthly payment is $463.16, total paid is $16,673.63, and total interest is $1,673.63. These totals use the unrounded amortization payment internally before rounding displayed figures to cents. A shorter term raises the monthly payment but reduces total interest.
How to Use This Calculator
Understanding Loan Terms:
- Principal: The original amount you borrowed
- Interest Rate: The annual percentage charged by the lender (APR)
- Term: How long you have to repay the loan (in months)
- Amortization: The process of paying off a loan with fixed payments over time
Tips for Lower Costs: Choose the shortest loan term you can afford (shorter = less interest). If rates are low, consider paying extra toward principal to accelerate payoff. Some lenders offer rate discounts for automatic payments or larger down payments.
Frequently Asked Questions
How much total interest will I pay?
Total interest is the sum of payments minus the original loan amount, using unrounded amortization payments internally. For a $15,000 loan at 7% with no fees, the 5-year estimate is $297.02 per month, $17,821.08 total paid, and $2,821.08 interest. The 3-year estimate is $463.16 per month, $16,673.63 total paid, and $1,673.63 interest. A shorter term generally reduces total interest while increasing each payment.
Can I pay off a loan early?
Yes. Most lenders allow early payoff without penalties. Paying extra toward principal accelerates your payoff and saves on interest. Always confirm your lender allows prepayment without penalties.
How does interest rate affect my payment?
Interest rate has a major impact. A 1% difference on a $15,000 loan changes the monthly payment by $20-30 depending on term length. Shopping around for better rates can save thousands over the loan's life.
What is APR vs interest rate?
APR (Annual Percentage Rate) includes the interest rate plus fees, while the interest rate is just the cost of borrowing. APR gives you a more complete picture of the total borrowing cost.