How to use the loan calculator
- Choose what to calculate. "Monthly payment" works out the payment for a loan amount. "How much can I borrow?" works backwards from the payment you can afford.
- Enter the loan amount (or the monthly payment), the interest rate (APR) and the loan term in years or months.
- Set the first payment month so the payoff date and the schedule show real dates.
- Open Extra payments to add a fixed amount each month or a one-time payment, and see the interest saved and the new payoff date.
- Switch the amortization schedule between yearly and monthly rows to see how each payment splits between interest and principal.
How the payment is calculated
Installment loans use the standard amortization formula. With a loan amount P, a monthly rate r (the annual rate ÷ 12) and n monthly payments, the payment is P × r ÷ (1 − (1 + r)−n). Each month interest is charged on the balance still owed, and the rest of the payment reduces that balance. That is why early payments are mostly interest and later ones mostly principal, and why any extra payment saves interest for the rest of the loan.
The calculator uses the rate you enter as the annual interest rate. If your lender charges an origination fee that is taken out of the loan, the APR on your offer is higher than the interest rate; enter the interest rate for the payment, and compare offers by APR.
Worked example
A $20,000 loan at 9% for 5 years (60 payments) costs $415.17 a month. Total interest is $4,910.03, so you repay $24,910.03 in all. Adding $100 a month clears it in 47 payments instead of 60 and saves $1,183.03 of interest. Working backwards, a $400 monthly payment at the same rate and term supports a loan of about $19,269.
Common types of loan
- Personal loans are usually unsecured installment loans with a fixed rate and a term of a few years. The rate depends mainly on your credit history and income, and some lenders charge an origination fee.
- Student loans come from the federal government or private lenders. Federal loans have fixed rates set for each school year and offer income-driven repayment plans, deferment and forbearance; this calculator shows the standard fixed payment. Interest that builds up while you are in school is usually added to the balance before repayment starts, so enter the balance at the start of repayment.
- Home equity loans are secured by your home and paid back in fixed monthly installments. Because the home is collateral, rates are usually lower than for unsecured loans, but you can lose the home if you do not repay. A home equity line of credit (HELOC) is different: it usually has a variable rate and an interest-only draw period, so its payments change.
- Auto loans and mortgages work the same way but have their own costs; use the dedicated calculators linked below.
What can make your real payment different
- Variable rates change the payment over time. The calculator assumes a fixed rate.
- Daily interest: some lenders charge interest by the day, so the exact interest each month varies slightly with the number of days.
- Fees and insurance added to the loan increase the amount you repay.
- Prepayment penalties on some loans reduce the benefit of extra payments; check your agreement.
Related calculators
Use the mortgage calculator for a home loan with property tax, insurance and PMI, and the auto loan calculator for a car with trade-in and sales tax. If you have several debts, the debt payoff calculator plans the order to pay them. To see what fits your budget, check your take-home pay with the paycheck calculator, or browse all salary and money calculators. In the UK, use the UK loan calculator.
Frequently asked questions
How do I calculate a monthly loan payment?
Divide the annual interest rate by 12 to get the monthly rate r, count the number of payments n, and use payment = P × r ÷ (1 − (1 + r)^−n). For $20,000 at 9% over 60 months that is $415.17. The calculator does this for you and shows the full schedule.
How much interest will I pay on a loan?
Multiply the monthly payment by the number of payments and subtract the amount borrowed. A $20,000 loan at 9% over 5 years has $4,910.03 of total interest. A shorter term or a lower rate reduces it; so do extra payments.
Is it better to pay extra on a loan?
Extra payments go straight to principal, so you pay less interest and finish sooner, as long as the loan has no prepayment penalty. Whether it is the best use of the money depends on your rate, your emergency savings and other debts with higher rates.
What is the difference between the interest rate and the APR?
The interest rate sets the payment. The APR expresses the yearly cost including certain fees, such as an origination fee, so it is the better number for comparing offers. If there are no fees, the two are the same.
How much can I borrow for a given monthly payment?
Choose "How much can I borrow?", enter the payment you can afford, the rate and the term. The calculator reverses the payment formula: at 9% over 5 years, $400 a month supports about $19,269.
Updated