Loan calculator
Enter the loan amount, interest rate and term and this loan calculator gives your monthly payment, total interest and a year-by-year amortization schedule instantly. Example: 20,000 at 7% over 5 years costs 396.02 a month and 3,761.48 in total interest. You can also start from a fixed monthly payment, add extra payments and use any currency.
Example: Loan amount 20,000 · Interest rate 7 % per year · Calculate by: loan term · Loan term 5 years · Extra payment per year 0 · Fixed-rate period 0 years · Schedule: One row per year → Monthly payment: 396.02. Source: Consumer Financial Protection Bureau – How does paying down a mortgage work? (amortization). Updated: .
How it is calculated
How the loan calculator works
Most personal loans, car loans and mortgages are amortizing loans: you pay the same amount every month until the loan is gone. Each payment covers the interest on the outstanding balance plus a part of the principal. As the balance falls, the interest share shrinks and the principal share grows – the amortization schedule shows this year by year, as the US Consumer Financial Protection Bureau explains for mortgages.
- Loan term: you know the amount, rate and term – the calculator finds the monthly payment.
- Monthly payment: you know what you can pay each month – the calculator finds the payoff time.
- Initial repayment rate: common for European mortgages – see below.
Loan amount, interest rate, monthly schedule and comparison
“Calculate by” lets you solve for any value: payment and term → loan amount shows how much a monthly payment can support (the same as =PV in a spreadsheet), and payment and term → interest rate finds the rate that matches an amount, payment and term (=RATE × 12). The amortization schedule can be switched from years to one row per month, and the chart above it shows how much of each year goes to interest and to principal. Tick “Compare with a second scenario” to run the same amount with a different rate, term or extra payment and see payment, payoff time, total interest and total cost side by side. To add an extra amount every month instead of once a year, use the amortization calculator.
Loan payment formula
Monthly payment: M = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r the monthly rate (annual rate ÷ 12) and n the number of monthly payments. In Excel or Google Sheets the same result comes from =PMT(7%/12, 60, -20000).
Interest in a given month = remaining balance × annual rate ÷ 12. For 20,000 at 7% the first month's interest is 116.67; of the 396.02 payment, 279.35 reduces the balance. In year one you pay 1,290.34 interest.
Payoff time from a fixed payment: n = −ln(1 − P × r ÷ M) ÷ ln(1 + r) months. If the payment is not larger than the first month's interest, the loan is never repaid.
Examples: how the term changes payment and total interest
| Loan | Rate | Term | Monthly payment | Total interest |
|---|---|---|---|---|
| 20,000 personal loan | 7% | 3 years | 617.54 | 2,231.50 |
| 20,000 personal loan | 7% | 5 years | 396.02 | 3,761.48 |
| 20,000 personal loan | 7% | 7 years | 301.85 | 5,355.80 |
| 10,000 personal loan | 8% | 5 years | 202.76 | 2,165.92 |
| 50,000 loan | 7% | 10 years | 580.54 | 19,665.17 |
| 30,000 car loan | 6.5% | 60 months | 586.98 | 5,219.11 |
| 300,000 mortgage | 6.5% | 15 years | 2,613.32 | 170,398.28 |
| 300,000 mortgage | 6.5% | 30 years | 1,896.20 | 382,636.71 |
A longer term lowers the payment but raises the total interest: on the 30-year mortgage the interest is more than the loan itself.
Extra payments
Extra payments reduce the balance at once and therefore every later interest charge. 20,000 at 7% over 5 years with an extra 2,000 at the end of each year is paid off after 3 years and 7 months, with 2,708.73 interest instead of 3,761.48. On the 300,000 mortgage at 6.5%, an extra 5,000 a year cuts the payoff time from 30 to 19 years. Whether you can overpay without a fee depends on your loan agreement.
Interest rate, APR and special cases
Interest is charged monthly on the remaining balance and rounded to the cent; the last payment settles any rounding difference. The effective annual rate shown here is (1 + r)12 − 1 and excludes fees. The APR quoted by your lender also includes origination fees and other charges, so it can be higher. If an origination fee is deducted from the loan, you receive less than the amount you repay interest on.
The initial repayment rate option is common for mortgages in Germany and some other European countries: instead of a term you choose what percentage of the loan you repay in the first year. The fixed-rate period field shows the balance left when a fixed rate ends, as with UK fixed-rate mortgages. Balloon payments and interest-only periods are not modelled. The calculator works in any currency – dollars, pounds, rupees or euros. It is a model calculation; your loan agreement and the lender's own schedule are what count.
Frequently asked questions
How is a monthly loan payment calculated?
Monthly payment = P × r × (1 + r)n ÷ ((1 + r)n − 1), with P = loan amount, r = annual rate ÷ 12 and n = number of months. 20,000 at 7% over 60 months gives 396.02 a month.
How do I calculate the interest on a loan?
Each month the interest is the remaining balance × annual rate ÷ 12. Total interest = all payments − loan amount: 60 × 396.02 minus 20,000, adjusted for the rounded last payment, gives 3,761.48 on a 20,000 loan at 7% over 5 years.
Can I use this as a car loan calculator?
Yes. Enter the amount you finance after the down payment and trade-in, the interest rate and the term – for 60 months enter 5 years, for 72 months enter 6 years. Taxes and fees that are rolled into the loan belong in the loan amount.
What is an amortization schedule?
A table showing, for every period, how much of your payments went to interest and to principal and how much you still owe. Early in the loan most of each payment is interest; near the end it is mostly principal.
How much do extra payments save?
Every extra amount you pay off saves interest at the loan rate for the rest of the term and shortens the payoff time. On 20,000 at 7% over 5 years, an extra 2,000 a year saves 1,052.75 interest and ends the loan 17 months early.
Is a shorter or a longer loan term better?
A shorter term costs less interest but needs a higher payment: 20,000 at 7% costs 617.54 a month and 2,231.50 interest over 3 years, or 301.85 a month and 5,355.80 interest over 7 years. Choose the shortest term whose payment fits your budget.
How much can I borrow with a given monthly payment?
Loan amount = M × (1 − (1 + r)−n) ÷ r, or =PV(7%/12, 60, -500) in Excel: 500 a month at 7% over 60 months supports a loan of about 25,251. Enter that amount with "monthly payment" to check the payoff time.
What is the difference between interest rate and APR?
The interest rate is what is charged on the outstanding balance. The APR is the yearly cost of the loan including fees such as origination charges; in the UK and EU it also includes the effect of monthly compounding. Either way it is usually a little higher than the interest rate.
Sources and legal basis
As of: · Editorial policy
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