Loan Calculator
Find the monthly payment, total interest and total cost of a fixed-rate loan.
Monthly payment
$495.03
- Total interest
- $4,701.82
- Total of all payments
- $29,701.82
- Number of payments
- 60 months
Paying $495.03 a month for 60 months repays the loan, with $4,701.82 in interest. You pay $29,701.82 in all.
Calculation breakdown
| Step | Formula | Result |
|---|---|---|
| Monthly interest rate | 7% ÷ 12 | 0.5833% |
| Monthly payment | $25,000.00 × r ÷ (1 − (1 + r)^−60) | $495.03 |
| Total interest | $29,701.82 total paid − $25,000.00 borrowed | $4,701.82 |
How it works
Enter the amount you borrow, the yearly interest rate and the length of the loan. The calculator assumes a fixed rate and equal monthly payments.
Here n is the number of monthly payments. At a 0% rate the payment is simply the loan amount divided by n.
Worked example
Freddie Mac’s example is a $135,000 loan at 4.5% for 30 years (n = 360):
- Monthly rate: r = 4.5% ÷ 12 = 0.375%
- Payment: $684.03 a month
- Month 1: $506.25 interest and $177.78 principal
- Total of 360 payments: about $246,247, of which about $111,247 is interest
Rounding
The payment is rounded to the cent, and so is the interest in each month, as lenders do. The final payment is adjusted by a few cents so the balance ends at exactly zero.
Sources
Frequently asked questions
How is a monthly loan payment calculated?
The payment comes from the amount borrowed, the monthly interest rate and the number of monthly payments, using the standard amortization formula shown above. Each payment is the same size, and it is rounded to the cent. Early payments are mostly interest, and later ones are mostly principal.
What is the difference between the interest rate and the APR?
The interest rate is the yearly cost of borrowing the money. The APR also includes certain fees, so it is usually a little higher. This calculator works from the rate you enter, so use the interest rate in your loan offer for the payment, and compare lenders using the APR.
Why is the total interest so large on a long loan?
Interest is charged on the balance that is still owed, and a longer term keeps that balance high for longer. On a $135,000 loan at 4.5%, the interest over 30 years is more than 80% of the amount borrowed. A shorter term raises the payment but cuts the total interest sharply.
Does this work for car loans and personal loans?
Yes, for any fixed-rate loan with equal monthly payments, which covers most car loans, personal loans and student loans. It does not cover variable rates, interest-only periods, balloon payments or fees added to the balance.
Can I pay the loan off early?
Paying extra reduces the balance sooner and so lowers the interest you pay. This calculator shows the schedule without extra payments. Check your loan terms for any prepayment penalty before paying extra.
Results are estimates for information only, not financial advice. Your lender's figures, which can include fees and different rounding, are the ones that count.