How to use the loan calculator
- Enter the loan amount you plan to borrow in dollars.
- Type the annual interest rate as a percentage (for example, 6.5).
- Set the loan term in years (use decimals for partial years, like 2.5).
- Read the monthly payment, total interest and total cost in the results panel.
How the monthly payment is calculated
The standard formula for a fixed-rate loan payment divides the principal across equal monthly installments that include both interest and principal repayment. The formula is:
M = P * r / (1 - (1 + r)^(-n))
Where M is the monthly payment, P is the principal (loan amount), r is the monthly interest rate (annual rate divided by 12 then by 100) and n is the total number of monthly payments (years multiplied by 12).
For example, a $10,000 loan at 5 percent annual interest over 1 year has a monthly rate of 0.05 / 12 = 0.0041667 and 12 payments. Plugging these in: M = 10000 * 0.0041667 / (1 - (1.0041667)^-12) = 856.07. Over 12 months you pay $10,272.90 total, meaning $272.90 goes toward interest.
Common loan scenarios reference table
This table shows how different combinations of principal, rate and term affect the monthly payment and total interest. All values are rounded to the nearest cent.
| Loan amount | Rate | Term | Monthly payment | Total interest |
|---|---|---|---|---|
| $10,000 | 5% | 1 year | $856.07 | $272.90 |
| $20,000 | 0% | 5 years | $333.33 | $0.00 |
| $100,000 | 6% | 30 years | $599.55 | $115,838.19 |
| $300,000 | 7% | 30 years | $1,995.91 | $418,527.60 |
| $35,000 | 5.9% | 5 years | $674.92 | $5,495.20 |
Notice how a zero percent rate means every dollar goes directly to the principal. Even small changes in the interest rate on large balances or long terms can shift the total interest by thousands of dollars.
Understanding loan amortization
Amortization is the process of paying off debt through regular installments. In the early months of a loan, a larger share of each payment covers interest because the outstanding balance is highest. As the balance shrinks, more of each payment applies to the principal.
This loan calculator gives you the totals rather than a month-by-month schedule. If you need the detailed breakdown showing exactly how much of each payment goes to interest versus principal, use the amortization schedule calculator instead. Understanding amortization helps explain why making extra principal payments early in the term saves significantly more interest than doing so near the end.
Practical uses for this calculator
A repayment calculator is useful whenever you borrow money at a fixed rate. Common applications include mortgages, auto loans, personal loans and student loans. Before signing any agreement, entering the numbers here lets you compare offers from different lenders side by side.
You can also test how changing the term affects affordability. Extending a loan from 15 to 30 years lowers the monthly payment but dramatically increases total interest. Shortening the term raises the payment while saving money overall. Use this tool alongside a future value calculator if you want to model what happens when you invest the difference between two payment options.
Edge cases and common mistakes
Several inputs can produce misleading results if entered incorrectly. First, always enter the annual rate as a whole number or decimal percentage (like 6.5, not 0.065). The formula divides it by 100 internally.
Second, fractional years work fine. A 30-month loan should be entered as 2.5 years. Third, a zero percent interest rate is valid and simply divides the principal evenly across all months with no interest charged. Finally, very large loan amounts or extremely long terms may produce numbers that exceed typical budgets, so always verify the total cost against your income before committing.
Worked examples
Each result below was produced by the same code the tool runs, so you can check your own numbers against them.
| Example | Input | Result |
|---|---|---|
| Standard mortgage | Loan amount ($): 300000; Annual interest rate (%): 7; Loan term (years): 30 | Monthly payment: $1,995.91; Total interest: $418,526.69; Total cost: $718,526.69; Number of payments: 360 |
| Auto loan | Loan amount ($): 35000; Annual interest rate (%): 5.9; Loan term (years): 5 | Monthly payment: $675.02; Total interest: $5,501.31; Total cost: $40,501.31; Number of payments: 60 |
| Personal loan | Loan amount ($): 10000; Annual interest rate (%): 12.5; Loan term (years): 3 | Monthly payment: $334.54; Total interest: $2,043.31; Total cost: $12,043.31; Number of payments: 36 |
| Student loan | Loan amount ($): 50000; Annual interest rate (%): 4.5; Loan term (years): 10 | Monthly payment: $518.19; Total interest: $12,183.05; Total cost: $62,183.05; Number of payments: 120 |
FAQ
What formula does this loan calculator use?
It uses the standard fixed-rate annuity formula: M = P * r / (1 - (1 + r)^-n), where r is the monthly interest rate and n is the total number of monthly payments.
Can I use this for a car loan?
Yes. Enter the financed amount as the principal, the dealer or bank APR as the rate and the term in years (for example, 5 years for a 60-month auto loan).
Does this account for taxes, insurance or fees?
No. This calculator computes only principal and interest. Property taxes, homeowner insurance, origination fees and other costs must be added separately to estimate your true out-of-pocket payment.
What happens if the interest rate is zero?
With a zero percent rate, no interest accrues. The monthly payment is simply the principal divided by the total number of months.
How do I enter a term that is not a whole number of years?
Use decimals. For an 18-month loan, enter 1.5 years. For 42 months, enter 3.5 years.
Is my financial data sent to a server?
No. All calculations happen locally in your browser. Nothing you type is transmitted or stored.