Loan Calculator
Work out the monthly payment, total interest, and total cost of any loan.
How the calculator works
Most installment loans use amortization: each payment covers the interest accrued that month plus a slice of the principal. Early in the loan, interest makes up a large share of every payment; as the balance shrinks, more of each payment goes to the principal. The calculator applies the standard amortization formula with monthly compounding — the same math banks use — so the result matches typical lender quotes for fixed-rate products. It also shows how many payments you will make and what share of the very first payment is pure interest, which is often eye-opening: on a low-rate, long-term loan the first payment can be mostly interest.
Formula
Where:
- M — the monthly payment
- P — the loan amount (principal)
- r — the monthly interest rate (annual rate ÷ 12 ÷ 100)
- n — the total number of monthly payments
Example
For a $10,000 loan at 6% APR over 5 years: the monthly rate is 0.5%, there are 60 payments, and the payment works out to $193.33. Over the full term you would repay $11,599.68 — $1,599.68 of which is interest, and about 26% of the first payment goes to interest alone. Shorten the term to 3 years and the payment rises to $304.22, but total interest falls to $951.90: term length is the strongest lever you have on the cost of a loan.