Finance
Loan payment calculator
Enter what you're borrowing, the annual rate your lender quoted, and how long you'll take to repay it.
How the monthly payment is worked out
A standard loan is amortising: you pay the same amount every month, and each payment covers the interest that accrued that month plus a slice of the balance. Early on, most of the payment is interest. Late on, most of it is principal. The payment itself never changes.
P = amount borrowed
r = monthly rate = annual rate ÷ 12 ÷ 100
n = total number of monthly payments
The two places people go wrong are both in that second line. The rate has to be converted from annual to monthly, and from a percentage to a decimal. A 6% annual rate is 0.005 per month, not 6 and not 0.06. This calculator does both conversions for you and prints the monthly rate on the tape so you can see it.
What the total interest figure tells you
Total interest is simply the monthly payment multiplied by the number of payments, minus the amount you borrowed. It's the number worth comparing between offers, because a longer term almost always produces a smaller monthly payment while costing considerably more overall.
A $20,000 loan at 6% is a clear example. Over three years the payment is around $608 and you pay roughly $1,900 in interest. Stretch the same loan to seven years and the payment drops to about $292 — but the interest climbs past $4,500. The monthly figure looks better; the loan is worse.
What this calculator doesn't include
It models the loan itself and nothing around it. Real quotes often add arrangement or origination fees, early-repayment penalties, and — for mortgages — property tax, buildings insurance and any mortgage insurance premium. Those are commonly bundled into the figure a lender shows you, so a lender's monthly quote will usually be higher than the number here.
It also assumes a fixed rate for the whole term. If your rate is variable or fixed only for an introductory period, this shows the payment while that rate applies, not afterwards.
Common questions
Is APR the same as the interest rate?
No. The interest rate is the cost of borrowing the money. APR is meant to fold in compulsory fees as well, which is why it's usually the higher of the two. If you want this calculator to approximate the true cost including fees, enter the APR rather than the headline rate.
Does this work for a mortgage?
Yes — a repayment mortgage uses exactly this formula. Enter the loan amount after your deposit, the rate, and the term in years. Just remember it won't include tax, insurance or any escrow amount your lender collects alongside the payment.
What happens if I pay extra each month?
Anything above the scheduled payment normally comes off the principal, which shortens the term and cuts total interest — often by a surprising amount. This calculator doesn't model overpayments; it shows the scheduled position only.
Why is my lender's monthly figure different?
Usually fees, insurance, or a different day-count convention. Some lenders also calculate interest daily rather than monthly, which shifts the result slightly. A difference of a few dollars is normal; a large gap usually means the quote includes something extra.