Loan Payment Calculator
Enter the amount, interest rate, and term to see your fixed monthly payment — plus the total interest you'll pay over the life of the loan.
How loan payments are calculated
Fixed-payment loans (auto loans, personal loans, most mortgages) use the amortization formula:
M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
where P is the amount borrowed, r is the monthly rate (APR ÷ 12), and n is the number of monthly payments. Example: $20,000 at 7.5% APR for 5 years gives a payment of about $400.76/month, and roughly $4,046 in total interest.
What your payment is really made of
Each payment covers that month's interest first; the remainder reduces your balance. Early on, a big slice is interest — over time the balance shrinks and more of each payment goes to principal. This is why:
- Extra payments early save the most interest — they cut the balance that all future interest is computed on.
- Longer terms mean lower payments but much more interest. Stretching the example above to 7 years drops the payment to $306 but raises total interest to about $5,760 — 42% more.
Typical interest rates (US, mid-2020s ballpark)
| Loan type | Typical APR range |
|---|---|
| Mortgage (30-year fixed) | 6–7.5% |
| New car loan | 6–9% |
| Used car loan | 8–12% |
| Personal loan (good credit) | 8–15% |
| Credit card | 20–28% |
Your actual rate depends heavily on credit score, term length, and lender — always compare at least three offers.
APR vs. interest rate
The APR (annual percentage rate) includes the interest rate plus most mandatory fees (origination fees, points), making it the honest number for comparing offers. Two loans with the same interest rate can have different APRs — pick by APR.
Frequently asked questions
Does this work for mortgages?
Yes, for the principal-and-interest part. A real monthly housing payment adds property tax, homeowners insurance, and possibly PMI/HOA — typically 20–40% on top.
What happens if I pay extra each month?
With most loans, extra payments go straight to principal, shortening the loan and cutting total interest. Confirm your lender applies extras to principal and charges no prepayment penalty.
Why is my quoted payment slightly different?
Lenders may round differently, charge fees inside the loan, or use daily rather than monthly interest accrual. This calculator matches the standard amortization used by the large majority of installment loans.
This tool is for general information only and is not financial advice.