Loan Payment Calculator

How to Use the Loan Payment Calculator

The Loan Payment Calculator computes monthly payments, total interest, and the total cost of any installment loan. This works for auto loans, personal loans, student loans, and any other fixed-rate amortizing loan. Enter your loan details to see exactly what you will pay.

Entering Loan Details

Provide the loan amount (principal), annual interest rate, and loan term. You can specify the term in months or years. For example, a $25,000 auto loan at 5.9% APR for 60 months. Click Calculate to see your monthly payment of approximately $483.35.

The Payment Formula

This calculator uses the same amortization formula as mortgage calculations: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1]. For the auto loan example: P = $25,000, r = 0.059/12 = 0.004917, n = 60. The monthly payment works out to $483.35, with total payments of $29,001 and total interest of $4,001.

Comparing Loan Offers

Use the calculator to compare different loan offers side by side. A lower interest rate always saves money, but a shorter term saves even more on interest despite higher monthly payments. A $20,000 loan at 7% for 3 years costs $2,212 in interest, while the same loan for 5 years costs $3,761 in interest.

Early Payoff Scenarios

Making extra payments can significantly reduce your loan term and total interest. Even an extra $50 per month on a $25,000 loan can save hundreds in interest and shave months off the repayment period. The calculator can show you the impact of additional payments.

Types of Loans

This calculator works for any fixed-rate installment loan including auto loans (typically 3-7 years), personal loans (1-7 years), student loans (10-25 years), boat loans, RV loans, and equipment financing. Variable-rate loans require recalculation when rates change.

Frequently Asked Questions

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

A: The interest rate is the cost of borrowing the principal. The APR (Annual Percentage Rate) includes the interest rate plus certain fees and costs, giving a more complete picture of the loan cost. This calculator uses the interest rate for payment computation.

Q: How do extra payments affect my loan?

A: Extra payments go directly toward reducing the principal balance, which reduces future interest charges. This shortens the loan term and decreases total interest paid. Even small additional amounts make a meaningful difference over time.

Q: Can I calculate payments for an interest-only loan?

A: For an interest-only period, the monthly payment is simply: Principal × (Annual Rate / 12). A $200,000 loan at 6% has interest-only payments of $1,000/month. No principal is paid down during this period.