Loan Calculator
Enter the amount, the interest rate and the term to see your monthly payment, the total interest and a year-by-year amortization schedule.
Amortization schedule by year
| Year | Paid | Interest | Principal | Balance |
|---|
Useful information about the loan calculator
How the loan calculator works
Most personal loans, car loans and student loans are amortizing loans: you repay them with the same payment every month. At the start most of each payment covers interest; as the balance falls, more and more of it repays the principal. The calculator applies the standard amortization formula used by banks and shows exactly how each year's payments are split.
You only need three numbers from your loan offer: the amount you borrow, the annual interest rate and the term. If the offer shows an APR, use it: it includes most fees and gives a more realistic total cost.
The loan payment formula
M = P × r ÷ (1 − (1 + r)−n)
- M: monthly payment
- P: loan amount (principal)
- r: monthly interest rate, that is the annual rate ÷ 12 (5% a year = 0.05 ÷ 12 = 0.004167)
- n: number of monthly payments (3 years = 36)
With a 0% rate there is no interest and the payment is simply the amount divided by the number of payments.
Example: a $10,000 loan at 5%
Borrowing $10,000 at 5% for 3 years gives a monthly payment of $299.71. Over 36 payments you pay back $10,789.52, so the loan costs $789.52 in interest. Stretching the same loan to 5 years lowers the payment to $188.71, but the interest rises to $1,322.74: about 68% more for a smaller monthly bill.
Adding $100 a month to the 3-year loan pays it off in 27 months instead of 36 and saves around $200 of interest.
How to lower the cost of a loan
- Compare APRs, not just rates: two loans at the same rate can cost very different amounts once fees are included.
- Improve your credit score before applying: a better score usually means a lower rate.
- Borrow only what you need: every extra dollar borrowed costs interest for the whole term.
- Pick the shortest term you can afford and make extra payments when you can, if there is no prepayment penalty.
Interest rate vs APR
The interest rate is the price of borrowing the money. The APR (annual percentage rate) adds most of the fees you pay to get the loan, such as origination fees, and expresses everything as a yearly rate. In the UK and Ireland lenders show it as the representative APR; in the EU it is the APRC. When you compare offers, the APR is the fairer yardstick.
Frequently asked questions
How do I calculate my monthly loan payment?
Multiply the loan amount by the monthly interest rate, then divide by 1 minus (1 + monthly rate) raised to the power of minus the number of payments. The monthly rate is the annual rate divided by 12. This calculator does it for you and shows the full schedule.
What is the monthly payment on a $10,000 loan?
At 5% for 3 years (36 payments) the payment is $299.71 a month and you pay $789.52 in interest. Over 5 years at the same rate it drops to $188.71 a month, but total interest rises to $1,322.74.
Does the calculator include fees?
No. It uses the interest rate you enter. If your lender charges origination or other fees, enter the APR instead of the interest rate: the APR includes most fees, so the result gets closer to your real cost.
Is a shorter loan term always better?
A shorter term means a higher monthly payment but much less interest in total. Choose the shortest term whose payment fits comfortably in your budget, leaving room for emergencies.
What happens if I pay extra each month?
Every extra payment goes straight to the principal, so the balance falls faster, you pay less interest and the loan ends earlier. Use the extra payment field to see how many months and how much interest you save. Check first that your lender does not charge a prepayment penalty.
