Loan calculator
Find the monthly payment and true cost of any fixed-rate loan.
Monthly payment
How loan payments work
A fixed-rate loan is repaid in equal monthly installments through a process called amortization. Each payment covers the interest due that month plus a slice of the principal. Early on, most of your payment goes to interest; later, most goes to principal. This calculator finds the level payment that pays the loan off exactly on schedule.
The formula
P is the loan amount, r is the monthly rate (annual rate ÷ 12), and n is the number of payments.
Worked example
Borrow $25,000 at 7% for 5 years (60 payments) and the monthly payment is about $495.03. Over the full term you repay roughly $29,702, of which about $4,702 is interest.
Frequently asked questions
How is a loan payment calculated?
The monthly payment comes from an amortization formula based on the amount borrowed, the interest rate, and the number of payments. The payment stays the same each month while the split between interest and principal shifts over time.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal. The APR (annual percentage rate) also folds in certain fees, so it is usually a little higher and is a better way to compare loan offers.
Does a longer term lower the monthly payment?
Yes, stretching the loan over more months lowers each payment, but you pay more total interest. A shorter term raises the payment and cuts total interest.
Can I pay off a loan early to save money?
Usually yes. Paying extra toward principal reduces the balance interest is charged on, which lowers total interest and shortens the loan. Check that your loan has no prepayment penalty first.
What affects the interest rate I am offered?
Lenders look at your credit score, income, debt levels, loan amount, and term. A stronger credit profile and a shorter term generally earn a lower rate.