How do I calculate a monthly loan payment?

Use M = P × [r(1 + r)ⁿ] ÷ [(1 + r)ⁿ − 1], where P is the amount borrowed, r is the annual rate divided by twelve, and n is the number of months. For $25,000 at 8.9% over 60 months that gives $517.75 a month. The calculator above does this and then shows the full month-by-month schedule underneath.

Why is so much of my early payment interest?

Because interest is charged on the balance outstanding, and at the start the balance is at its largest. The payment is level, so the split between interest and principal shifts steadily across the term: in the first month most of it is interest, in the last month almost none is. The schedule shows the crossover.

Does paying an extra $100 a month really make a difference?

More than most people expect. The extra dollar does not just avoid one month of interest, it avoids interest for every remaining month of the loan. Enter an amount in the extra field and the calculator will show the interest saved and how much earlier the loan clears. Whether that is the best home for the money is a separate question, compare it against saving the same amount.

What is the difference between the interest rate and the APR?

The rate prices the borrowing; the APR also folds in fees charged to get the loan. If your loan has an origination fee, the APR is higher than the note rate and this calculator, which uses the rate you enter on the amount you enter, will understate the true cost. A rough correction is to add the fee to the loan amount, which is what the APR calculator does properly.

Is a longer term with a lower payment a good idea?

It is cheaper each month and more expensive in total, and the total rises faster than the term does. Run the same loan at two terms and compare the total interest figures, the difference is usually larger than people assume, because the balance stays high for so much longer.

Can I use this for a mortgage or a car loan?

The arithmetic is the same, but both have costs this calculator ignores. For a mortgage, use the mortgage calculator, which adds property tax, insurance and PMI. For a car, use the auto loan calculator, which handles sales tax, a trade-in and dealer fees. For a revolving balance, the credit card payoff calculator models a minimum that shrinks as you pay.

Loan Calculator

This loan calculator gives the monthly payment and the total interest on any amortising loan. The figure worth reading is the second one: how much of everything you hand over never touches the balance, and how sharply that falls if you add anything at all to the payment.

Example numbers

The answerfrom an example

This loan costs $6,065 in interest, 19.5% of everything you hand over.

Worked on $25,000 at 8.90% over 5 years. Change anything below to use yours.

Monthly payment: $517.75
Total interest: $6,065
Total repaid: $31,065

The figures behind it

Monthly payment: $517.75; The level scheduled payment.
Total interest: $6,065; The cost of borrowing, on top of what you repay.
Total repaid: $31,065; Principal and interest together.
Interest as a share: 19.5%; Of every dollar handed over, this much never touches the balance.
Paid off in: 5 years; The full scheduled term.

Everything you will hand over$31,065

80%

20%

The amount borrowedRepaid in full over the term.$25,000
Interest19.5% of every dollar you pay.$6,065

What you still owe, and what it has cost

Years from today

Balance remainingInterest paid to date

Payment scheduleShow

The table scrolls sideways

Month	Payment	Interest	Principal	Balance	Interest to date
1	$518	$185	$332	$24,668	$185
2	$518	$183	$335	$24,333	$368
3	$518	$180	$337	$23,996	$549
4	$518	$178	$340	$23,656	$727
5	$518	$175	$342	$23,314	$902
6	$518	$173	$345	$22,969	$1,075
7	$518	$170	$347	$22,621	$1,246
8	$518	$168	$350	$22,271	$1,413
9	$518	$165	$353	$21,919	$1,578
10	$518	$163	$355	$21,564	$1,741
11	$518	$160	$358	$21,206	$1,901
12	$518	$157	$360	$20,845	$2,058
13	$518	$155	$363	$20,482	$2,213
14	$518	$152	$366	$20,116	$2,365
15	$518	$149	$369	$19,748	$2,514
16	$518	$146	$371	$19,376	$2,660
17	$518	$144	$374	$19,002	$2,804
18	$518	$141	$377	$18,626	$2,945
19	$518	$138	$380	$18,246	$3,083
20	$518	$135	$382	$17,864	$3,219
21	$518	$132	$385	$17,478	$3,351
22	$518	$130	$388	$17,090	$3,481
23	$518	$127	$391	$16,699	$3,607
24	$518	$124	$394	$16,305	$3,731
25	$518	$121	$397	$15,908	$3,852
26	$518	$118	$400	$15,509	$3,970
27	$518	$115	$403	$15,106	$4,085
28	$518	$112	$406	$14,700	$4,197
29	$518	$109	$409	$14,291	$4,306
30	$518	$106	$412	$13,880	$4,412
31	$518	$103	$415	$13,465	$4,515
32	$518	$100	$418	$13,047	$4,615
33	$518	$97	$421	$12,626	$4,712
34	$518	$94	$424	$12,202	$4,805
35	$518	$91	$427	$11,775	$4,896
36	$518	$87	$430	$11,344	$4,983
37	$518	$84	$434	$10,911	$5,067
38	$518	$81	$437	$10,474	$5,148
39	$518	$78	$440	$10,034	$5,226
40	$518	$74	$443	$9,590	$5,300
41	$518	$71	$447	$9,144	$5,372
42	$518	$68	$450	$8,694	$5,439
43	$518	$64	$453	$8,241	$5,504
44	$518	$61	$457	$7,784	$5,565
45	$518	$58	$460	$7,324	$5,623
46	$518	$54	$463	$6,861	$5,677
47	$518	$51	$467	$6,394	$5,728
48	$518	$47	$470	$5,923	$5,775
49	$518	$44	$474	$5,450	$5,819
50	$518	$40	$477	$4,972	$5,860
51	$518	$37	$481	$4,491	$5,897
52	$518	$33	$484	$4,007	$5,930
53	$518	$30	$488	$3,519	$5,960
54	$518	$26	$492	$3,027	$5,986
55	$518	$22	$495	$2,532	$6,008
56	$518	$19	$499	$2,033	$6,027
57	$518	$15	$503	$1,530	$6,042
58	$518	$11	$506	$1,024	$6,053
59	$518	$8	$510	$514	$6,061
60	$518	$4	$514	$0	$6,065

What this result assumes

Interest is charged on the outstanding balance each month, so the early payments are mostly interest and the later ones mostly principal. That is why paying extra early is worth far more than paying the same amount later.
The rate you enter is treated as a nominal annual rate compounded monthly, which is how US consumer loans are quoted.
Origination fees, insurance sold alongside the loan and any prepayment penalty are not included. A loan with an origination fee has a higher true APR than its note rate.

Methodology

Reviewed August 31, 2026

How the payment is worked out

The level monthly payment comes from the standard amortization formula, M = P × [r(1 + r)ⁿ] ÷ [(1 + r)ⁿ − 1], where P is the amount borrowed, n the term in months and r the monthly rate. US consumer loans quote a nominal annual rate compounded monthly, so r is the annual rate divided by twelve rather than an effective-rate conversion.

At a 0% rate the formula is undefined — it evaluates to zero over zero — so the balance is divided evenly across the term instead. Interest is rounded to the cent each month, exactly as a lender would, and the final payment absorbs whatever rounding remainder has built up so the balance lands on precisely zero. The test suite asserts that the principal repaid over the whole schedule equals the amount borrowed to the cent.

Each month, interest is charged on the balance outstanding at the start of the month and whatever is left of the payment reduces the principal. That ordering is why the early payments are mostly interest: the balance they are charged against is at its largest.

The figure most calculators do not show

The interest share — what proportion of everything you hand over never touches the balance — is a better description of a loan than its rate. A 8.9% rate over five years sounds moderate; the fact that around 11% of every dollar paid is pure cost is more concrete.

That share rises steeply with the term, and this is where long loans do their damage. Doubling a term does not double the interest; it more than doubles it, because the balance stays high for far longer. Change the term field and watch the share move while the rate stays fixed.

What paying extra does

Every extra dollar goes entirely to principal, and it stops accruing interest for the whole remaining term. That is why the saving from a small monthly overpayment is much larger than it looks — the extra is not earning the rate for one month, it is avoiding the rate for years.

The extra-payment figures here compare against the same loan left at its scheduled payment, so the interest saved and months saved are like-for-like rather than measured against a different loan.

One practical caveat the arithmetic cannot capture: some servicers apply an unallocated overpayment to your next scheduled payment rather than to principal, which advances your due date but does not shorten the term or save any interest. If you intend to overpay, tell the servicer in writing to apply it to principal.

Assumptions

The interest rate is fixed for the whole term.
The rate entered is a nominal annual rate compounded monthly, as US consumer loans are quoted.
Payments are made on time, in full, at monthly intervals.
Extra payments reduce principal in the month they are made and shorten the term rather than lowering the payment.
Origination fees, application fees and any credit insurance sold with the loan are excluded, so the true APR of a fee-bearing loan is higher than the rate you enter.
No prepayment penalty, late fee or deferment is modelled.
Every figure is nominal. Inflation is ignored.

Sources

Common questions

How do I calculate a monthly loan payment?: Use M = P × [r(1 + r)ⁿ] ÷ [(1 + r)ⁿ − 1], where P is the amount borrowed, r is the annual rate divided by twelve, and n is the number of months. For $25,000 at 8.9% over 60 months that gives $517.75 a month. The calculator above does this and then shows the full month-by-month schedule underneath.
Why is so much of my early payment interest?: Because interest is charged on the balance outstanding, and at the start the balance is at its largest. The payment is level, so the split between interest and principal shifts steadily across the term: in the first month most of it is interest, in the last month almost none is. The schedule shows the crossover.
Does paying an extra $100 a month really make a difference?: More than most people expect. The extra dollar does not just avoid one month of interest, it avoids interest for every remaining month of the loan. Enter an amount in the extra field and the calculator will show the interest saved and how much earlier the loan clears. Whether that is the best home for the money is a separate question, compare it against saving the same amount.
What is the difference between the interest rate and the APR?: The rate prices the borrowing; the APR also folds in fees charged to get the loan. If your loan has an origination fee, the APR is higher than the note rate and this calculator, which uses the rate you enter on the amount you enter, will understate the true cost. A rough correction is to add the fee to the loan amount, which is what the APR calculator does properly.
Is a longer term with a lower payment a good idea?: It is cheaper each month and more expensive in total, and the total rises faster than the term does. Run the same loan at two terms and compare the total interest figures, the difference is usually larger than people assume, because the balance stays high for so much longer.
Can I use this for a mortgage or a car loan?: The arithmetic is the same, but both have costs this calculator ignores. For a mortgage, use the mortgage calculator, which adds property tax, insurance and PMI. For a car, use the auto loan calculator, which handles sales tax, a trade-in and dealer fees. For a revolving balance, the credit card payoff calculator models a minimum that shrinks as you pay.

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