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Loan Calculator

Calculate monthly payments, total interest and total cost for any fixed-rate loan.

Result

Monthly Payment
$405.53
Total Paid
$24,331.67
Total Interest
$4,331.67
PrincipalInterest
$8K$6K$4K$2K$0Principal: $3KPrincipal: $4KPrincipal: $4KPrincipal: $4KPrincipal: $5KInterest: $1KInterest: $1KInterest: $892Interest: $562Interest: $204Yr 1Yr 2Yr 3Yr 4Yr 5

About the Loan Calculator

Whether it's a personal loan, a business loan, or any other fixed-rate installment loan, the math behind the monthly payment is the same. Our Loan Calculator takes the loan amount, interest rate, and term, and instantly shows your monthly payment, total interest, and total cost - so you know exactly what you're signing up for before you borrow.

How It Works

The calculator uses the standard amortizing-loan formula, which spreads the loan amount across equal monthly payments over the term you choose. Each payment includes both interest (calculated on the remaining balance) and principal, with the interest portion shrinking and the principal portion growing every month until the loan is paid off.

M = P × [r(1+r)^n] / [(1+r)^n − 1] where P = loan amount, r = monthly interest rate, n = number of payments

Formula & Methodology

This is the same present-value-of-an-annuity formula behind every fixed-rate installment loan, whether it's a mortgage, auto loan, or personal loan - the specific type of collateral or use of funds doesn't change the underlying math, only the rate a lender is willing to offer. The monthly rate r is the annual rate divided by 12, and n is the term in years multiplied by 12; plugging those into the formula finds the one fixed payment that exactly pays off P over n payments given rate r.

Step-by-Step: Calculating It By Hand

  1. 1Divide the annual interest rate by 12 to get the monthly rate, r.
  2. 2Multiply the loan term in years by 12 to get the total number of payments, n.
  3. 3Compute (1+r)^n.
  4. 4Plug the loan amount, r, and (1+r)^n into the amortization formula to find the monthly payment.

Examples

Short-term loan

$20,000 at 8% over 5 years comes out to roughly $406/month, with about $4,340 in total interest.

Longer term, lower payment

The same $20,000 stretched to 7 years lowers the monthly payment but increases total interest paid - a trade-off worth checking before you sign.

Advantages

  • Works for personal loans, business loans, or any fixed-rate installment loan
  • Shows total interest, not just the monthly payment
  • Makes it easy to compare different terms and rates side by side
  • Instant results with no account or personal data required

Common Mistakes

  • Only comparing monthly payments and ignoring total interest cost
  • Not factoring in origination fees, which reduce the amount you actually receive
  • Assuming a longer term is always 'cheaper' because the payment is lower
  • Forgetting that a lower credit score usually means a higher rate than advertised

Edge Cases to Watch For

  • A 0% promotional rate makes the formula divide by zero - payment simplifies to loan amount ÷ number of payments.
  • Origination fees reduce how much cash you actually receive without changing the payment calculation itself, since payments are based on the stated loan amount.
  • Prepayment penalties on some loans mean paying it off early doesn't always save as much as the interest-savings math alone would suggest.
  • A variable-rate loan only follows this fixed formula until the rate resets, at which point payment is recalculated on the remaining balance.

Common Use Cases

  • Estimating payments before applying for a personal loan
  • Comparing offers from multiple lenders
  • Planning a business loan repayment budget
  • Checking affordability before a large purchase
Written & fact-checked by the Calculateus TeamLast updated August 5, 2026How we verify our formulas

Frequently asked questions

How is the monthly payment calculated?

It uses the standard amortization formula, which spreads the loan amount plus interest into equal payments over the term, so early payments are interest-heavy and later ones are principal-heavy.

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Conclusion

Knowing your exact monthly payment and total interest before you borrow puts you in a much stronger position - both for budgeting and for negotiating with lenders. If your loan involves a vehicle or a home specifically, check out our dedicated Auto Loan and Mortgage calculators for more relevant detail.

References