Loan Payment Calculator
Calculate the monthly payment for home loans, auto loans, personal loans and mortgages from principal, interest rate and term.
Written by Rahman · Last reviewed
Quick answer
An $18,000 loan at 9% over four years costs $447.93 a month, $21,501 repaid in total, of which $3,501 is interest. Every fixed-payment loan works the same way: each payment covers that month's interest first, and only what's left reduces the balance. That's why early payments are mostly interest and later ones mostly principal. A shorter term raises the monthly payment but cuts the total interest sharply.
- Principal500,000.00 (65.8%)
- Total interest260,054.64 (34.2%)
- Total760,054.64
| Year | Principal paid | Interest paid | Balance |
|---|---|---|---|
| 1 | 32,316.96 | 43,688.50 | 467,683.04 |
| 2 | 35,348.51 | 40,656.95 | 432,334.53 |
| 3 | 38,664.45 | 37,341.02 | 393,670.08 |
| 4 | 42,291.44 | 33,714.02 | 351,378.64 |
| 5 | 46,258.67 | 29,746.80 | 305,119.97 |
| 6 | 50,598.05 | 25,407.41 | 254,521.92 |
| 7 | 55,344.50 | 20,660.97 | 199,177.42 |
| 8 | 60,536.19 | 15,469.27 | 138,641.23 |
| 9 | 66,214.91 | 9,790.56 | 72,426.32 |
| 10 | 72,426.32 | 3,579.14 | 0.00 |
Total interest over 10 years: 260,054.64. The CSV has one row per month.
Results are estimates for general guidance and are not financial, tax or legal advice. Except where a calculator names a currency, figures carry no currency of their own: put in pounds and you get pounds back, put in rupees and you get rupees. Figures depend on the assumptions you enter and on rates that change over time. Check current rates and speak to a qualified adviser before acting on them.
About the Loan Payment Calculator
A loan payment calculator tells you the fixed monthly amount you must pay to fully repay a loan by the end of its term. Each payment covers the interest charged for that month plus a portion of the original principal, so the balance falls steadily to zero.
In the early months a larger share of each payment goes to interest; as the balance shrinks, more of it reduces the principal. This calculator shows your monthly payment alongside the total interest you will pay over the life of the loan, helping you compare loan offers before you commit.
M = [P × r × (1 + r)^n] / [(1 + r)^n − 1]
P is the loan principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly payments.
Suppose you take a $200,000 home loan at 7% annual interest for 25 years. The calculator returns a monthly payment of about $1,414. Over the full 25 years you pay roughly $424,000, meaning $224,000 of that is interest, more than the original loan itself. Switching the term to 15 years raises the monthly payment to about $1,798 but cuts total interest to roughly $124,000, a saving of $100,000. This trade-off between monthly affordability and total cost is the single biggest decision in any loan.
Term length costs more than the rate usually does
People tend to negotiate hard over the interest rate and then accept whatever term makes the payment comfortable, which is the wrong way round if you care about the total cost. A longer term lowers the payment by spreading it out, but every extra month is another month of interest on whatever you still owe.
On $25,000 at 7%, a three-year term costs about $772 a month and $2,789 in total interest. Stretching the same loan to seven years drops the payment to about $377 (a saving of $395 a month) and raises the interest to $6,695. The longer term costs roughly $3,900 more to borrow exactly the same amount at exactly the same rate.
- Choose the shortest term with a payment you can comfortably keep up, rather than the longest one you qualify for.
- Where a lender allows overpayment without penalty, taking a longer term and overpaying voluntarily gives similar savings with more flexibility.
- Long terms on depreciating assets create negative equity, where the balance exceeds what the asset is worth, a particular risk on car loans beyond five years.
Why the split between interest and principal shifts
The payment stays the same, but what it does changes every month. Interest is charged on the balance still outstanding, so at the start (when the balance is highest) most of each payment covers interest and little reduces the debt. As the balance falls the interest portion shrinks and the principal portion grows, accelerating toward the end.
That's why an early overpayment is worth far more than a late one. Money paid off the balance in the first year saves interest in every month that follows, while the same amount paid in the final year saves almost none.
- Check whether overpayments shorten the term or lower the payment. Shortening the term is what saves you the interest, and lowering the payment mostly doesn't.
- Some agreements carry early repayment charges, which can offset the benefit of overpaying in the first few years.
- A loan paid off halfway through its term will already have cost more than half its total interest, because the interest is heaviest at the start.
How term and interest rate affect your monthly payment
| Loan amount | Rate | Term | Monthly payment | Total interest |
|---|---|---|---|---|
| $200,000 | 7% | 15 years | $1,798 | $123,562 |
| $200,000 | 7% | 20 years | $1,550 | $172,143 |
| $200,000 | 7% | 25 years | $1,414 | $224,029 |
| $200,000 | 7% | 30 years | $1,331 | $279,018 |
| $200,000 | 9% | 20 years | $1,799 | $231,791 |
A longer term lowers each monthly payment but multiplies the total interest you pay, and a 2% rate increase costs you nearly $60,000 over 20 years.
Frequently Asked Questions
How is a monthly loan payment calculated?
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The payment is calculated from the loan amount, the monthly interest rate and the number of months using the standard amortisation formula above. The result is a fixed payment that fully repays the loan by the end of the term.
Does a longer term reduce my monthly payment?
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Yes. Spreading repayment over more months lowers each payment, but it also increases the total interest you pay because interest accrues for longer.
Does making extra payments help?
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Yes. Extra payments reduce the outstanding principal, which cuts future interest charges and shortens the loan. Enter an amount in the optional "Extra monthly payment" field above to see the new payoff time and exactly how much interest it saves: whether a real extra payment shortens the term or lowers future payments instead depends on your lender.
Is the interest rate fixed or variable?
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This calculator assumes a fixed rate for the whole term. If your loan has a variable or adjustable rate, your payment can change when the lender revises the rate.
What costs are not included in this estimate?
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Origination fees, loan insurance, prepayment penalties, late-payment fees, property taxes and homeowner's insurance are billed separately. Budget for them in addition to the monthly payment shown here.
Is it better to make a bigger down payment or choose a longer term?
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A larger down payment shrinks the loan and cuts total interest the most. A longer term only eases monthly cash flow; it does not save money, it costs more.
How does my credit score affect my payment?
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A higher credit score usually qualifies you for a lower interest rate, which directly lowers your monthly payment and total interest. Even a 0.5% rate reduction on a 20-year loan can save tens of thousands of dollars.
Sources
- 12 CFR § 1026.18 — Regulation Z, closed-end credit disclosures (eCFR) — The disclosure rules behind the figures this page estimates. Subsection (k) requires the agreement to state whether a charge may be imposed for repaying principal early (the early-repayment charge warned about above), while (e), (g) and (h) require the APR, the payment schedule and the total of payments respectively, which are the three numbers to compare between offers.