Enter your loan amount, interest rate, and term (in years or months) to get your fixed monthly payment, the total interest you'll pay, and a year-by-year view of the remaining balance.
How loan payments work
A fixed-rate loan is amortized: you pay one identical amount every month, but what's inside that payment shifts over time. Each month the lender first takes interest on whatever you still owe; the rest of the payment reduces the principal. Because the balance is biggest at the start, early payments are interest-heavy — and every payment after that buys a slightly bigger slice of actual debt reduction. The year-by-year table below the result shows exactly how the balance melts.
The formula
M = P × r(1 + r)n ÷ ((1 + r)n − 1)
M is the monthly payment, P the amount borrowed, r the monthly interest rate (annual rate ÷ 12 ÷ 100), and n the total number of monthly payments. At 0% interest the formula collapses to M = P ÷ n.
Worked example
Borrow $20,000 at 7% for 5 years: r = 0.07 ÷ 12 ≈ 0.005833 and n = 60.
M = 20,000 × 0.005833 × (1.005833)60 ÷ ((1.005833)60 − 1) = $396.02 per month.
Total of all 60 payments: $23,761.44, of which $3,761.44 is interest.
Extra payments: the cheapest interest you'll never pay
Anything you pay beyond the required amount goes straight to principal — and principal that's gone can never accrue interest again. On the $20,000 example, adding just $50 a month pays the loan off about eight months sooner and saves roughly $500 in interest. The effect grows with the size and length of the loan, which is why extra payments on a mortgage early in its term are so dramatic. One caveat: check that your lender applies extra amounts to principal rather than "advancing" your next payment, and that there's no prepayment penalty.
Frequently asked questions
How do I calculate my monthly loan payment?
Use the amortization formula M = P × r(1+r)^n ÷ ((1+r)^n − 1), where P is the amount borrowed, r is the monthly rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly payments. For a 0% loan it's simply the amount divided by the number of months.
What is amortization?
Amortization is paying off a loan with fixed payments where each one covers that month's interest first, then reduces the principal. Early payments are mostly interest because the balance is largest at the start; as the balance falls, more of each identical payment goes to principal.
How can I pay off my loan faster?
Pay more than the required amount and make sure the extra is applied to principal. Because interest is charged on the remaining balance, every extra dollar removes all the future interest that dollar would have generated. Even a modest extra payment each month can shave months off the term and a meaningful chunk off total interest.
What's the difference between interest rate and APR?
The interest rate is what the lender charges on the balance; APR (annual percentage rate) also folds in fees like origination charges, so it's usually a bit higher. For comparing loan offers, APR is the fairer yardstick. This calculator uses the plain interest rate, since that's what drives the payment math.
Why does a longer loan term cost more?
A longer term lowers the monthly payment but leaves the balance outstanding longer, so interest accrues for more months. A $20,000 loan at 7% costs about $3,761 in interest over 5 years, but roughly $7,866 over 10 years — the payment drops, the total cost nearly doubles.