How to use this loan calculator
Enter three numbers: the loan amount you want to borrow, the annual interest rate your lender is offering, and the loan term in years. The calculator updates instantly as you type — no button to press. You'll see your fixed monthly payment, the total interest you'll pay over the life of the loan, the total cost (principal plus interest), and how long it will take to pay the loan off.
To see the effect of paying more than the minimum, add an amount in the extra monthly payment field. The results will show your new payoff date along with exactly how much interest and time the extra payments save compared with making only the required payment, and the chart will plot both scenarios side by side. Use Copy link to results to share your exact scenario with anyone.
How the monthly payment formula works
This tool uses the standard amortization formula used by banks and lenders for fixed-rate loans:
M = P × r × (1 + r)n ÷ ((1 + r)n − 1)
- M — your monthly payment
- P — the principal (amount borrowed)
- r — the monthly interest rate (annual rate ÷ 12, as a decimal)
- n — the total number of monthly payments (years × 12)
Each month, interest is charged on the remaining balance, and whatever is left of your payment reduces the principal. Because the balance shrinks over time, the interest portion of each payment falls while the principal portion grows — that shifting split is exactly what the amortization schedule above shows. For a 0% loan there is no interest to charge, so the payment is simply the amount borrowed divided by the number of months.
Why extra payments are so powerful
Every extra dollar you pay goes straight to the principal, which permanently lowers the balance that interest is calculated on for every remaining month. On long loans the compounding effect is dramatic: on a $250,000 mortgage at 6.5% for 30 years, an extra $200 per month shortens the loan by roughly six years and saves tens of thousands of dollars in interest. Use the extra payment field above and watch the "you save" line to test scenarios for your own loan. Before paying extra, check that your loan has no prepayment penalty and that the lender applies extra amounts to principal rather than to future payments.
Frequently asked questions
- How is a monthly loan payment calculated?
- Payments on an amortizing loan use the formula M = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the amount borrowed, r is the monthly rate (annual rate ÷ 12), and n is the number of monthly payments. At 0% interest the payment is just the loan amount divided by the number of months.
- Do extra monthly payments really save money?
- Yes. Extra payments reduce the principal immediately, so every following month's interest charge is smaller. Made consistently, even modest extra payments can cut years off a loan and save thousands in interest — the longer the loan, the bigger the effect.
- What is an amortization schedule?
- It's a payment-by-payment table showing how much of each payment covers interest and how much reduces your balance. Early on, most of the payment is interest; near the end, almost all of it is principal. See the dedicated amortization schedule calculator for a date-by-date version you can export.
- What's the difference between interest rate and APR?
- The interest rate is the cost of borrowing the principal itself. APR (annual percentage rate) also folds in most fees and closing costs, so it's usually a little higher and is the better number for comparing offers. This calculator works with the interest rate.
- Does this work for mortgages, auto loans, and personal loans?
- Yes — the math applies to any fixed-rate, fully amortizing loan. For a mortgage including property tax, insurance, and PMI, use the mortgage calculator; for a car loan with trade-in and sales tax, use the auto loan calculator.