Loan Calculator
Enter your loan amount, interest rate, and term to instantly see your monthly payment, total interest, total cost, and how long it takes to pay off. You also get a full amortization schedule and a year-by-year balance chart. Add extra monthly payments to see how much interest you can save and how many months you can cut from the term.
How the loan payment formula works
A standard amortizing loan charges interest on the remaining balance each period, so early payments are mostly interest and later payments are mostly principal. The monthly payment is calculated with the formula: P = L * r * (1+r)^n / ((1+r)^n - 1), where L is the loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. For an interest-free loan (r = 0) the formula simplifies to payment = principal / months.
How to use this calculator
Enter the loan amount, the annual interest rate (APR), and the term in years and months. Your monthly payment, total interest, and total cost update instantly. Optionally enter an extra monthly payment to see how much interest you save and how many months you cut from the term. Scroll down to the amortization schedule to see every payment broken into principal and interest, and check the chart to visualize your balance falling over time.
Principal vs. interest breakdown
In the early months of a loan, most of each payment is interest because the outstanding balance is high. As you pay down the balance, the interest portion shrinks and the principal portion grows - this is called amortization. The donut chart above shows the total split between what you borrowed (principal) and what you pay for the privilege of borrowing (interest). A 5-year loan at 6.5% on $20,000 costs about $3,400 in interest, while the same loan at 10% costs over $5,400.
The power of extra payments
Adding even a small extra amount to each monthly payment can save thousands of dollars in interest and shave months off the term. Because every extra dollar goes directly to principal, it immediately reduces the balance on which interest is charged in all future months. For example, an extra $100 per month on a $20,000 loan at 6.5% over 5 years saves over $600 in interest and pays the loan off about 10 months early. The savings grow larger with longer terms and higher rates.
Choosing a loan term
A longer term lowers the monthly payment but increases total interest paid. A shorter term costs more per month but gets you out of debt faster and at lower total cost. A 3-year term on a $10,000 personal loan at 9% costs about $319/month and $495 total interest. A 5-year term on the same loan costs $208/month but $2,487 in interest - nearly five times more despite only costing $111 less per month. When you can comfortably afford a higher payment, a shorter term is almost always the better deal financially.
Typical interest rates by loan type (US, 2024-2026)
| Loan Type | Typical APR Range | Common Term | Notes |
|---|---|---|---|
| 30-year fixed mortgage | 6.5% - 8.0% | 30 years | Conforming, good credit |
| 15-year fixed mortgage | 5.8% - 7.5% | 15 years | Lower rate, higher payment |
| New car loan (excellent credit) | 4.0% - 7.0% | 36 - 72 months | Secured by vehicle |
| Used car loan | 6.0% - 11.0% | 36 - 60 months | Higher rate than new |
| Personal loan (good credit) | 8.0% - 16.0% | 2 - 7 years | Unsecured |
| Personal loan (fair credit) | 16.0% - 30.0% | 2 - 5 years | Unsecured, higher risk |
| Federal student loan (undergrad) | 5.5% - 7.0% | 10 - 25 years | Fixed, income-driven plans |
| Credit card debt | 20.0% - 28.0% | Revolving | Avoid carrying a balance |
Representative APR ranges for common loan types. Your actual rate depends on credit score, lender, and market conditions.
Frequently asked questions
What is an amortizing loan?
An amortizing loan is one where each payment covers the interest accrued since the last payment, plus a portion of the principal. Over time, the principal falls toward zero and the loan is fully paid off. Mortgages, auto loans, and most personal loans are amortizing loans. Each payment amount stays constant, but the split between interest and principal shifts: early payments are mostly interest, later payments are mostly principal.
How is the monthly payment calculated?
The standard amortization formula is: monthly payment = principal x (monthly rate x (1 + monthly rate)^n) / ((1 + monthly rate)^n - 1), where n is the number of months. For example, a $10,000 loan at 6% APR for 3 years has a monthly rate of 0.5% and n = 36, giving a monthly payment of about $304.
Does making extra payments reduce my monthly payment?
No, extra payments do not reduce your required monthly payment on a standard loan. Instead, they reduce the outstanding principal, which means less interest accumulates, you pay off the loan sooner, and you spend less in total. Your required payment stays the same, but the loan ends earlier.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal. The APR (Annual Percentage Rate) includes the interest rate plus other fees and costs associated with the loan, such as origination fees. APR is the more complete measure of borrowing cost. This calculator uses APR as the rate input.
Why do I pay more interest at the start of a loan?
Because interest is charged on the outstanding balance. Early in the loan your balance is near the full principal, so the interest portion of each payment is large. As you pay down the balance month by month, there is less to charge interest on, so the interest portion shrinks and the principal portion of each payment grows. This is exactly what the amortization schedule shows.
How much can I save by refinancing a loan?
Compare the total cost of your current loan (remaining monthly payments times months left) with the total cost of a new loan at a lower rate. Subtract any refinancing fees from the savings. This calculator can help you model both scenarios by entering the remaining balance and term as a new loan.