How do I calculate a loan payment?

Use the amortization formula: M = P * [r(1+r)^n] / [(1+r)^n - 1]. Enter your loan amount, interest rate, and term into this calculator for instant results.

What factors affect my loan payment?

Three main factors: loan amount (higher = bigger payment), interest rate (higher = bigger payment), and loan term (longer = smaller payment but more total interest).

Is a shorter or longer loan term better?

Shorter terms have higher monthly payments but lower total interest. Longer terms have lower payments but cost more in total interest over the life of the loan.

What is APR and how does it differ from the interest rate?

The interest rate is the base cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus fees such as origination fees and points, giving you the true annual cost of the loan. Always compare APRs when shopping for loans.

Free Loan Payment Calculator

Calculate monthly payments, total interest, and total cost for any loan. Works for personal loans, auto loans, and more.

Save

Loan Amount

USD

Annual Interest Rate

Loan Term (Years)

years

Monthly Payment

$500.95

Total Amount Paid$30,056.92

Total Interest$5,056.92

Principal

Total Interest

Monthly Payment vs Loan Term (Years)

View formula & how it works →

How Loan Payments Are Calculated

A fixed-rate loan payment stays the same every month, but the split between principal and interest changes. In the first year of a 5-year auto loan, about 60% of each payment goes to interest. By year 4, that flips and most goes to principal. The formula handles this automatically.

The Formula

Payment = P * [r(1+r)^n] / [(1+r)^n - 1]

P = Amount borrowed

r = Monthly interest rate (APR / 12 / 100)

n = Number of payments (term in months)

This is the same amortization formula used for mortgages, auto loans, personal loans, and student loans.

When to Use This

Before signing any loan agreement. Plug in the amount, rate, and term to see what you'll actually pay per month. Then try different terms: a 48-month auto loan vs. 60-month vs. 72-month. The monthly payment drops with longer terms, but total interest paid goes up.

What Changes the Payment Most

Interest rate and loan term. On a $25,000 auto loan, the difference between 5% and 8% APR over 60 months is about $40/month, which adds up to $2,400 over the life of the loan. Shortening from 60 to 48 months increases your payment by roughly $100/month but saves over $1,000 in total interest.

Common Mistakes

Confusing APR with the monthly rate. The formula needs the monthly rate, which is APR divided by 12 and then by 100.

Ignoring fees. Some lenders charge origination fees (1-5% of the loan) that effectively raise the cost beyond what the stated APR suggests.

Extending the loan term to get a lower payment without calculating total interest. A 72-month auto loan at 6% costs thousands more in interest than a 48-month loan at the same rate.

Example Calculation

You take out a $25,000 personal loan at 7.5% annual interest for 5 years.

01Monthly interest rate: 7.5% / 12 = 0.625% (0.00625)
02Total payments: 5 * 12 = 60
03Monthly Payment = $25,000 * [0.00625 * (1.00625)^60] / [(1.00625)^60 - 1]
04Monthly Payment = $500.57
05Total paid: $500.57 * 60 = $30,034.20
06Total interest: $30,034.20 - $25,000 = $5,034.20

Example Calculations

What is the monthly payment on a $25,000 loan?

$483.65/month

1.Loan amount: $25,000
2.Interest rate: 7% annually → 0.5833% monthly
3.Term: 5 years (60 months)
4.Monthly payment = 25,000 × [0.005833(1.005833)⁶⁰] / [(1.005833)⁶⁰ − 1]
5.Monthly payment = $495.03

What is the monthly payment on a $10,000 personal loan?

$322.05/month

1.Loan amount: $10,000
2.Interest rate: 10% annually
3.Term: 3 years (36 months)
4.Monthly payment = $322.67
5.Total interest paid: $1,616.12

Frequently Asked Questions

Learn More

How to Calculate Mortgage Payments

Learn how to calculate mortgage payments step by step. Understand the mortgage payment formula, principal vs. interest breakdown, escrow, PMI, and how to use amortization schedules.