Loan Payment Calculator
Work out the monthly payment on any fixed-rate loan — personal, auto, student or mortgage — then see the full amortisation schedule and what extra payments would save you.
1 · What You're Solving For
Leave the deposit at zero and the first box is simply your loan amount.
We work backwards to the largest loan that fits that payment.
2 · Rate & Term
- Principal $0
- Interest $0
What the extra payment buys you
Amortisation schedule
| Month | Payment | Interest | Principal | Balance |
|---|
Heads up: this covers principal and interest only. Mortgages and auto loans usually add property tax, insurance, registration or lender fees on top, so your real bill will be higher. A quoted APR that includes fees will also differ slightly from a plain interest rate.
How to Use This Loan Calculator
The tool answers the two questions people actually bring to a lender, and you switch between them with the tabs at the top.
- Monthly payment — you know the price and the term, and you want the payment. Enter the amount, subtract any deposit, set the rate and term.
- How much can I borrow — you know your budget. Enter the monthly payment you can comfortably carry and the tool returns the largest loan that fits it.
In both modes the extra payment field is where the interesting numbers live. Add even a modest amount and the comparison panel shows how many months come off the term and how much interest disappears with them. On long loans the effect is much larger than most people expect, because every extra dollar goes straight to principal and stops accruing interest for the rest of the term.
The Formula Behind the Payment
Every fixed-rate instalment loan uses the same standard amortisation formula:
M = P × i ÷ (1 − (1 + i)−n)
Where M is the monthly payment, P is the principal borrowed, i is the monthly interest rate (your APR divided by 12) and n is the number of monthly payments.
Take $25,000 over five years at 7.5%. The monthly rate is 0.625%, the term is 60 payments, and the formula returns a payment of $500.95. Multiply that by 60 and you repay about $30,057 — meaning roughly $5,057 of the total is interest.
What Amortisation Actually Means
Your payment stays the same every month, but what it does changes completely over the life of the loan. Interest is charged on the balance you still owe, so when the balance is large, most of the payment is interest. As the balance falls, the interest portion shrinks and more of the same payment attacks the principal.
This is why the schedule matters. On a 30-year mortgage, the first payment can be roughly three-quarters interest. It takes around 18 years before the average payment is going mostly to principal. Toggle the schedule above between monthly and yearly view and you can watch the crossover happen in your own numbers.
The practical consequence: extra payments are worth dramatically more early in a loan than late. A single extra payment in year one removes decades of interest on that money. The same payment in the final year removes almost nothing, because there is barely any interest left to cancel.
Short Term vs. Long Term: The Real Trade-off
Lengthening the term is the easiest way to shrink a monthly payment, and it is the most expensive one. The same $25,000 at 7.5% looks like this:
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 3 years | About $778 | About $2,995 | About $27,995 |
| 5 years | About $501 | About $5,057 | About $30,057 |
| 7 years | About $383 | About $7,210 | About $32,210 |
Going from three years to seven cuts the monthly payment by roughly half — and more than doubles the interest. Neither choice is automatically wrong. A longer term with an affordable payment beats a short term you default on. But you should make that trade knowingly, and if you take the longer term for safety, using the extra payment field to overpay in good months gives you both.
APR vs. Interest Rate
The interest rate is the cost of borrowing the money. The APR is that rate plus mandatory lender fees — origination charges, points, some closing costs — expressed as a yearly percentage. APR is the fairer comparison number, which is why lenders are generally required to disclose it.
When you shop offers, compare APR to APR. A 6.5% rate with a 2% origination fee can easily cost more than a 6.9% rate with no fee, and the headline rate alone will not tell you that. This calculator treats the rate you enter as the rate applied to your balance, so for the truest picture, enter the quoted APR.
Five Ways to Pay Less Interest
- Put more down. Every dollar of deposit is a dollar you never pay interest on, and a larger deposit often unlocks a better rate tier.
- Take the shortest term you can genuinely afford — then treat the payment as non-negotiable.
- Round the payment up. Paying $550 instead of $501 barely registers in a monthly budget but can remove a year or more from a five-year loan. Test it in the extra payment field.
- Make one extra payment a year. Splitting your payment in half and paying every two weeks produces 26 half-payments — 13 full payments a year instead of 12 — and shortens most loans meaningfully.
- Refinance when rates or your credit improve. Weigh the closing costs against the interest saved, and check for prepayment penalties before you commit.
Before overpaying, confirm two things with your lender: that there is no prepayment penalty, and that extra payments are applied to principal rather than held as a prepaid future instalment. If they are applied wrongly, you get none of the benefit shown above.
Frequently Asked Questions
How is a monthly loan payment calculated?
With the amortisation formula M = P × i ÷ (1 − (1 + i)⁻ⁿ), where P is the principal, i is the annual rate divided by 12, and n is the total number of monthly payments. The payment stays fixed while the split between interest and principal shifts over time.
Why is so much of my early payment going to interest?
Interest is charged on the outstanding balance, which is at its largest at the start. As you pay the balance down, the interest portion of each fixed payment falls and the principal portion rises. This is normal amortisation, not a fee.
Does paying extra on a loan actually save money?
Yes, provided the extra is applied to principal and there is no prepayment penalty. Each extra dollar permanently removes the interest that dollar would have generated for the remaining term, which is why overpaying early is worth far more than overpaying late.
What is a good interest rate on a personal loan?
It depends heavily on credit score, term and country. Borrowers with strong credit typically see rates well below the average, while thin or damaged credit files can be quoted several times higher. The only reliable benchmark is quotes from three or more lenders for your own profile, compared on APR.
Should I choose a longer term for a lower payment?
Only if the shorter payment genuinely does not fit your budget. A longer term lowers the monthly cost but raises total interest substantially. A reasonable middle path is to take the longer term for safety and overpay whenever you can.
What is the difference between a secured and an unsecured loan?
A secured loan is backed by an asset — a house or car — which the lender can repossess if you default. That security means lower rates. An unsecured loan has no collateral, so rates are higher and approval leans more heavily on your credit history.
Does this calculator include taxes, insurance and fees?
No. It shows principal and interest only. For a mortgage you should add property tax, homeowners insurance and any HOA dues; for an auto loan, add tax, title and registration. Budget for those separately on top of the payment shown.
Is my loan information saved anywhere?
No. Every calculation runs locally in your browser. Nothing is transmitted, logged or stored.
Quick Glossary
- Principal
- The amount borrowed, before interest.
- APR
- Annual Percentage Rate — the interest rate plus mandatory lender fees.
- Term
- How long you have to repay, usually in months or years.
- Amortisation
- The schedule showing how each payment divides between interest and principal.
- Down payment
- Cash paid up front, reducing the amount financed.
- Prepayment penalty
- A fee some lenders charge for paying a loan off early.
- Secured loan
- A loan backed by collateral the lender can claim on default.
- Refinancing
- Replacing an existing loan with a new one, usually at a better rate.
Disclaimer: This calculator produces estimates for planning and comparison. It assumes a fixed interest rate, equal monthly payments and no fees, taxes, insurance or penalties. It is not financial or lending advice, and the figures shown are not a loan offer. Your lender's official disclosure and amortisation schedule are the authoritative numbers for any actual loan.