Loan Payment Calculator
The loan payment calculator helps you estimate how much you may need to pay each month on a fixed-rate loan. It also estimates the total amount repaid and the total interest paid over the life of the loan.
Enter the loan amount, annual interest rate and repayment term to calculate an estimated monthly payment.
What Is a Loan Payment?
A loan payment is the amount a borrower pays toward a loan according to the agreed repayment schedule.
For a standard amortizing loan, each payment generally includes both:
Principal
Interest
As the loan is repaid, the outstanding principal decreases.
Loan Payment Formula
For a standard fixed-rate amortizing loan, the monthly payment can be calculated using:
Monthly Payment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1]
Where:
P = loan principal
r = monthly interest rate
n = total number of monthly payments
The annual interest rate is converted to a monthly rate before applying the formula.
Example
Suppose you borrow:
$25,000
at:
7% annual interest
for:
5 years
The estimated monthly payment is approximately:
$495.03
Over 60 monthly payments, the estimated total repayment is approximately:
$29,701.80
The estimated total interest is approximately:
$4,701.80
How to Use the Loan Payment Calculator
Enter the Loan Amount.
Enter the Annual Interest Rate.
Enter the Loan Term in years.
Click Calculate Payment.
Review the estimated monthly payment.
Review the estimated total repayment and total interest.
How Interest Rate Affects Your Payment
The interest rate has a direct effect on the cost of borrowing.
If the loan amount and term remain unchanged, a higher interest rate generally results in a higher monthly payment and more total interest.
Even a relatively small difference in interest rates can produce a meaningful difference over a long repayment period.
How Loan Term Affects Payments
The loan term determines how many payments are made.
A longer term generally reduces the required monthly payment because the principal is spread over more payments.
However, a longer repayment period can result in substantially more interest being paid over the life of the loan.
A shorter term usually means higher monthly payments but potentially lower total interest.
Monthly Payment vs. Total Cost
A lower monthly payment does not necessarily mean a cheaper loan.
For example, extending a loan term can make the monthly payment more affordable while increasing the total amount of interest paid.
When comparing loans, consider both:
Monthly payment
and
Total repayment
rather than looking at the monthly payment alone.
What Happens With a 0% Interest Rate?
If the loan has no interest, the calculation is much simpler.
The monthly payment is:
Loan Amount ÷ Number of Monthly Payments
For example, a $25,000 loan over five years with 0% interest would have:
$25,000 ÷ 60 = $416.67 per month
Loan Payment Calculator vs. Business Loan Calculator
A general loan payment calculator can be useful for estimating payments on many types of fixed-rate loans.
A business loan calculator is specifically presented around business borrowing and business financing considerations.
The underlying payment calculation may be similar for a standard amortizing loan, but the purpose and context of the two calculators are different.
Important Considerations
This calculator provides an estimate based on a standard fixed-rate amortizing loan.
Actual loan agreements can include:
Application fees
Origination fees
Variable interest rates
Early repayment charges
Insurance
Different payment frequencies
Other lender-specific costs
These factors may change the actual cost of borrowing.
Frequently Asked Questions
How is a monthly loan payment calculated?
A standard fixed-rate monthly payment is calculated using the loan amount, monthly interest rate and total number of payments.
Does a longer loan term lower the monthly payment?
Generally, yes. However, a longer term can increase the total interest paid.
Does a higher interest rate increase the payment?
Yes. With the same loan amount and term, a higher interest rate generally produces a higher monthly payment.
Can I calculate a 0% interest loan?
Yes. The calculator handles a zero-interest loan by dividing the loan amount by the total number of monthly payments.
Does this calculator include loan fees?
No. It estimates principal and interest only. Actual lender fees and other charges can increase the total cost.
