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Work out the monthly payment, total interest and total cost of any amortizing loan.
Work out the monthly payment, total interest and total cost of any amortizing loan.
Enter values above and click Calculate — results will appear here with the formula explained.
Most installment loans use amortization: every month you pay interest on the remaining balance plus some principal. Early payments are mostly interest; later ones are mostly principal. The formula above produces the fixed monthly payment that exactly pays the loan off over its term. Because the balance is highest at the start, the interest portion of each payment is also highest at the start — a pattern called front-loading that surprises many first-time borrowers.
The total cost of a loan is driven by three levers — amount, rate and length. Doubling the term roughly doubles total interest even though the monthly payment falls, which is why shorter terms are cheaper overall whenever the payment is affordable. For example, borrowing $20,000 at 7.5% costs about $4,046 in interest over 5 years but roughly $8,500 over 10 years — more than double — while the monthly payment only drops from about $401 to about $237.
Pay attention to the difference between the interest rate and the APR (annual percentage rate). The interest rate is what the lender charges on the balance; the APR folds in most upfront fees and spreads them across the loan, which makes it the better number for comparing offers. Two loans with the same interest rate can have meaningfully different APRs once origination fees, points or mandatory insurance are included. Always compare APR to APR and monthly payment to monthly payment, never mix the two.
Fixed-rate loans lock the same payment for the whole term, which makes budgeting simple and protects you if market rates rise. Variable-rate loans start cheaper but reset periodically against a benchmark, so the payment can climb. A variable rate can make sense for a loan you plan to repay quickly — for instance a bridge loan cleared within two years — but for multi-year borrowing the certainty of a fixed rate is usually worth the small premium.
Extra payments attack principal directly and every dollar of principal you retire early stops earning interest for the lender for the rest of the term. Even one additional monthly payment per year on a 5-year loan can shave several months off the schedule and save hundreds in interest. Before prepaying, check for prepayment penalties in the loan agreement and confirm that extra amounts are applied to principal rather than treated as early payment of next month's bill.
Lenders judge applications on affordability, not just the headline payment. They typically look at your debt-to-income ratio (total monthly debt payments divided by gross monthly income), credit history and stable employment. A common guideline keeps total debt payments under roughly 36% of gross income. Running several scenarios through this calculator — different amounts, rates and terms — before you apply shows you exactly where your comfort zone ends and helps you negotiate from a position of knowledge rather than hope.
Work out the monthly payment, total interest and total cost of any amortizing loan. Formula: M = P · r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where r is the monthly rate (APR ÷ 12) and n is months.
Most installment loans use amortization: every month you pay interest on the remaining balance plus some principal. Early payments are mostly interest; later ones are mostly principal. The formula above produces the fixed monthly payment that exactly pays the loan off over its term. Because the balance is highest at the start, the interest portion of each payment is also highest at the start — a pattern called front-loading that surprises many first-time borrowers.
The total cost of a loan is driven by three levers — amount, rate and length. Doubling the term roughly doubles total interest even though the monthly payment falls, which is why shorter terms are cheaper overall whenever the payment is affordable. For example, borrowing $20,000 at 7.5% costs about $4,046 in interest over 5 years but roughly $8,500 over 10 years — more than double — while the monthly payment only drops from about $401 to about $237.
Pay attention to the difference between the interest rate and the APR (annual percentage rate). The interest rate is what the lender charges on the balance; the APR folds in most upfront fees and spreads them across the loan, which makes it the better number for comparing offers. Two loans with the same interest rate can have meaningfully different APRs once origination fees, points or mandatory insurance are included. Always compare APR to APR and monthly payment to monthly payment, never mix the two.
Fixed-rate loans lock the same payment for the whole term, which makes budgeting simple and protects you if market rates rise. Variable-rate loans start cheaper but reset periodically against a benchmark, so the payment can climb. A variable rate can make sense for a loan you plan to repay quickly — for instance a bridge loan cleared within two years — but for multi-year borrowing the certainty of a fixed rate is usually worth the small premium.
Extra payments attack principal directly and every dollar of principal you retire early stops earning interest for the lender for the rest of the term. Even one additional monthly payment per year on a 5-year loan can shave several months off the schedule and save hundreds in interest. Before prepaying, check for prepayment penalties in the loan agreement and confirm that extra amounts are applied to principal rather than treated as early payment of next month's bill.
Lenders judge applications on affordability, not just the headline payment. They typically look at your debt-to-income ratio (total monthly debt payments divided by gross monthly income), credit history and stable employment. A common guideline keeps total debt payments under roughly 36% of gross income. Running several scenarios through this calculator — different amounts, rates and terms — before you apply shows you exactly where your comfort zone ends and helps you negotiate from a position of knowledge rather than hope.
Borrowing $20,000 at 7.5% APR for 5 years: the monthly rate is 0.625% over 60 payments, giving $400.76 per month, $4,045.54 in total interest and $24,045.54 repaid overall. Stretch the same loan to 10 years and the payment falls to about $237.40, but total interest climbs to roughly $8,488 — you pay more than twice the interest to save about $163 a month. A second scenario: borrowing $12,000 at 5.9% for 3 years gives about $364.52 per month with roughly $1,122.71 in total interest, showing how a smaller balance plus a shorter term keeps the lender's share small.
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| Formula & worked example | ||||
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Formulas are standard public references (see our methodology). External standards are cited in the text where they apply.
Last reviewed: September 2026 · Report an error