🏦 Loan Calculator
Calculate monthly payments, total interest, and full amortization for any loan.
Our free Loan Calculator computes your monthly payment, total interest paid, and total repayment cost for any fixed-rate loan — car loans, personal loans, student loans, or any installment debt. Enter your loan amount, annual interest rate, and term in months to get instant results.
The Loan Payment Formula
M = monthly payment | P = principal | r = monthly rate (APR ÷ 12) | n = number of payments
This is the standard amortization formula used by all banks and lenders. Every month, your payment is split between interest (calculated on the remaining balance) and principal reduction. Early payments are mostly interest; later payments are mostly principal.
Worked Example — $20,000 Car Loan at 7% APR for 60 Months
Monthly rate: r = 0.07 ÷ 12 = 0.005833
Monthly payment: $20,000 × [0.005833 × (1.005833)⁶⁰] / [(1.005833)⁶⁰ − 1] = $396.02
Total paid: $396.02 × 60 = $23,761 | Total interest: $3,761
How Loan Term Affects Total Cost
Extending your loan term lowers monthly payments but dramatically increases total interest. On the same $20,000 at 7% APR:
- 36 months: $618/month — $2,236 total interest
- 48 months: $479/month — $3,004 total interest
- 60 months: $396/month — $3,761 total interest
- 72 months: $341/month — $4,560 total interest
The difference between 36 and 72 months is $277/month in payments but $2,324 more in total interest. Always consider total cost, not just the monthly payment.
How Interest Rate Affects Your Loan
Even a small rate difference has a large impact over a multi-year loan. On a $25,000 loan over 60 months:
- 5.0% APR: $472/month — $3,307 total interest
- 7.0% APR: $495/month — $4,752 total interest
- 9.0% APR: $519/month — $6,160 total interest
- 12.0% APR: $556/month — $8,362 total interest
Shopping for a rate just 2% lower on a $25,000 loan saves over $1,400 in interest. Always get quotes from at least three lenders before signing.
Making Extra Payments
Adding extra money to your monthly payment has an outsized effect. On a $20,000 loan at 7% for 60 months ($396/month standard payment):
- Pay an extra $50/month: saves $541 in interest, pays off 6 months early
- Pay an extra $100/month: saves $968 in interest, pays off 14 months early
- Pay an extra $200/month: saves $1,578 in interest, pays off 26 months early
When making extra payments, always specify that the additional amount should be applied to principal, not future payments. Otherwise some lenders will simply advance your next due date.
💡 Try different amounts, rates, and terms — our calculator updates instantly as you type.
Open Loan Calculator →Frequently Asked Questions
What is APR vs interest rate?
The interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus any fees (origination fees, closing costs), making it the true cost of the loan. Always compare APRs when shopping for loans, not just interest rates.
What is amortization?
Amortization is the process of paying off a loan through equal periodic payments over time. Each payment covers that month's interest on the remaining balance, with the rest going toward principal. Over time, more of each payment goes to principal as the balance decreases.
Should I choose a shorter or longer loan term?
Shorter terms mean higher monthly payments but less total interest and faster debt payoff. Longer terms mean lower monthly payments but significantly more interest. Choose the shortest term your budget can comfortably handle.
Is this calculator accurate for car loans and personal loans?
Yes — the formula works for any fixed-rate installment loan. For adjustable-rate loans, use the current rate to estimate the initial payment; future payments will change when the rate adjusts.