How this loan calculator works
Enter how much you want to borrow, the annual interest rate, and the term in years. The calculator works out a fixed monthly payment using the standard amortization formula — the same method banks use — so the loan is fully paid off by the end of the term. It also shows the total amount you'll pay and how much of that is interest.
The formula it uses
Every fixed-rate installment loan follows the same equation:
M = P × [ r(1+r)n ] ÷ [ (1+r)n − 1 ]
P is the amount borrowed, r is the monthly rate (annual rate ÷ 12), and n is the number of monthly payments (years × 12). The result is a level payment that covers interest first and chips away at principal over time.
Worked example
Borrow $20,000 at 7% over 5 years:
- Monthly payment: ≈ $396
- Total paid: ≈ $23,761
- Total interest: ≈ $3,761
How the term changes the cost
Same $20,000 loan at 7%, but over 3 years instead of 5: the payment rises to about $618/month, yet total interest drops to roughly $2,232 — about $1,500 less than the 5-year version. Shorter terms cost more monthly but far less overall.
Key terms
Principal — the amount you borrow. Interest rate — the yearly cost of borrowing, before fees. APR — the rate plus certain fees, better for comparing offers. Term — how long you take to repay. Amortization — the gradual shift of each payment from interest toward principal.
Common mistakes to avoid
Picking the longest term just for a low monthly payment and overpaying in interest. Comparing loans by interest rate instead of APR. Forgetting origination or processing fees that aren't in the quoted rate. Assuming a variable-rate loan will stay at today's rate — this tool models fixed rates only.
Frequently asked questions
What types of loans does this work for?
Any fixed-rate installment loan: car loans, personal loans, student loans, and home loans (mortgages). It does not model variable rates or extra fees.
Is APR the same as interest rate?
Not exactly. APR includes certain fees on top of the interest rate. For a rough estimate you can enter the APR in the rate field.
How does the term affect total interest?
A longer term lowers the monthly payment but raises total interest. A shorter term does the opposite — see the example above.
Do extra payments help?
Yes. Extra payments reduce principal directly, shorten the loan, and cut interest. Check for any prepayment penalty first.
What is amortization?
It's the schedule that splits each fixed payment into interest and principal. Open the schedule above to see it month by month.
Why is early-payment interest so high?
Interest is charged on the remaining balance, which is largest at the start, so early payments are mostly interest.
Does a lower rate or shorter term save more?
Both reduce interest. A lower rate helps without raising your payment; a shorter term saves the most but costs more monthly.
Is my data saved?
No. Everything runs in your browser and nothing is uploaded.