How Loan Calculator Works
The tool uses the standard amortizing loan payment formula: M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly payments. If the interest rate is zero, the payment is simply the loan amount divided by the number of payments.
How to Use This Tool
- Enter the total loan amount you're borrowing.
- Enter the annual interest rate as a percentage.
- Enter the loan term and choose whether it's in years or months.
- Select Calculate Payment to see your monthly payment, total interest and total amount paid.
Example
A $20,000 loan at 6.5% annual interest over 5 years (60 monthly payments) works out to roughly $391.32 a month — about $23,479 paid in total, of which around $3,479 is interest.
Helpful Tips
- A longer term lowers your monthly payment but increases the total interest you pay over the life of the loan.
- Even a small reduction in interest rate can meaningfully lower your total interest on larger loans — it's worth shopping around for rates.
- This estimates a standard fixed-rate, fixed-term amortizing loan; it won't reflect variable rates or extra one-off fees.
Frequently Asked Questions
Does this include fees like origination charges or insurance?
No, this calculates principal and interest only, based on the amount, rate and term you enter. Add any fees separately for a full cost picture.
What happens if I enter a 0% interest rate?
The calculator simply divides the loan amount evenly across the number of payments, since there's no interest to add.
Can I use this for a mortgage?
Yes, the same amortization formula applies to mortgages, auto loans, personal loans and most other fixed-rate installment loans.
Why is the total interest so much lower with a shorter term?
With a shorter term, you owe the balance for less time, so less interest accrues overall — even though the monthly payment is higher.
This tool runs entirely in your browser. Your input is not uploaded to any server.