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AllCalcHub

Loan Calculator

Find the monthly payment and total interest on any fixed-rate loan, and see how much an extra payment each month saves.

About the Loan Calculator

Most personal, car, student and business loans are amortized: you repay them in equal monthly payments, each covering that month's interest plus part of the balance. As the balance falls, more of every payment goes to principal.

The loan's interest rate and length decide the cost. A longer term lowers the payment but means paying interest for longer. Paying a little extra each month cuts both the time and the interest.

The formula

Payment = P × i ÷ (1 − (1 + i)⁻ⁿ)

P
amount borrowed
i
monthly interest rate (yearly rate ÷ 12 ÷ 100)
n
number of monthly payments

With a 0% rate the payment is simply P ÷ n. Interest each month = balance × i.

How to read your result

  • Monthly payment is the fixed amount due each month.
  • Total interest is the cost of borrowing; compare it between terms and lenders.
  • Add an extra monthly payment to see the interest and time you save.

Worked example

$25,000 at 7% for 5 years

  1. i = 7 ÷ 12 ÷ 100 = 0.0058333, n = 60
  2. Payment = $495.03 a month
  3. Total interest = $4,701.80
  4. With $100 extra a month: paid off in 49 months, interest $3,762.80 (saves $938.99)

Things to keep in mind

  • Fees such as origination or processing charges are not included; they raise the true cost (APR).
  • Assumes a fixed rate and payments on time every month.
  • Some lenders charge a fee for paying early. Check your loan agreement.

Questions people ask

What is the difference between the interest rate and APR?

The interest rate is the cost of borrowing the principal. APR adds most fees, so it shows the fuller yearly cost. Compare loans using APR.

Does a longer loan cost more?

Usually yes. The monthly payment is lower, but you pay interest for more months, so the total interest is higher.

Should I pay extra or invest instead?

Paying extra gives a guaranteed return equal to the loan's rate. If your loan rate is high, paying it down is often the better choice.

Sources