This estimates the fixed monthly payment for a loan based on the amount borrowed, the annual interest rate, and the term in months, along with the total paid and the total interest over the life of the loan. It uses the same amortization formula banks use to calculate equal monthly payments.
How to use it
- Enter the loan amount you're borrowing.
- Enter the annual interest rate as a percentage.
- Enter the term in months.
- Read the estimated monthly payment.
- Check the total paid and total interest to see the full cost over the loan's life.
- Adjust any value to compare how a different term or rate changes the payment.
When it helps
- Estimating car loan payments before you're at the dealership negotiating.
- Comparing how a shorter versus longer term changes both the monthly payment and the total interest.
- Getting a rough sense of affordability before formally applying for a personal loan.
- Understanding how much of a loan's cost comes from interest versus the original amount.
- Comparing offers from different lenders with different rates and terms.
Good to know
- A longer term usually lowers the monthly payment but raises the total interest paid over the loan's life.
- This assumes a fixed rate and equal monthly payments. A variable rate loan's real payments will differ over time.
- Real loan offers often include fees beyond interest, so treat this as an estimate rather than the exact number a lender will quote.
- Compare a few different term lengths side by side. A slightly higher monthly payment on a shorter term often means significantly less interest paid overall.
- Before signing anything, ask a lender directly for the annual percentage rate, which usually includes fees, rather than relying solely on the interest rate figure you plug into a calculator like this one.
Questions
What formula does this use?
The standard amortization formula for a fixed rate loan, which works out the constant monthly payment needed to pay off both principal and interest over the term.
Why does a longer term mean more total interest?
The same amount of borrowing spreads over more months, so more interest builds up over that longer period even though each payment is smaller.
Does this account for extra or early payments?
No, it assumes standard equal payments for the full term. Making extra payments in real life would reduce both the total interest and how long it takes to pay off.
Does this account for a down payment?
Enter the loan amount as the amount actually being borrowed after any down payment, not the full purchase price.
What if my rate is variable, not fixed?
This assumes a fixed rate for the full term. A variable rate loan's actual payments will change over time as the rate adjusts, so treat this as an estimate based on the current rate only.
What's the difference between interest rate and APR?
The interest rate is just the cost of borrowing the principal. APR usually bundles in certain fees too, giving a more complete picture of a loan's real yearly cost.