Payment Calculator

What does a payment calculator do?

A payment calculator answers one of two questions about a fixed-rate loan with monthly payments. If you know how long you want to borrow, it finds the monthly payment. If you know how much you can pay each month, it finds how long it will take to pay off the loan. Either way, it shows the total of all payments, the total interest, and an amortization schedule of every payment.

It works for any amortizing loan, including mortgages, auto loans, personal loans, and student loans. Taxes, insurance, and fees are not included, so add those separately when a lender quotes them.

How the monthly payment is calculated

With a fixed loan term, the loan payment calculator uses the standard formula for an amortizing loan:

Monthly payment = P × r ÷ (1 − (1 + r)⁻ⁿ)

P is the loan amount, r is the monthly interest rate (the annual rate divided by 12), and n is the number of monthly payments (the term in years times 12). At a 0% rate the payment is simply P ÷ n. The total of payments is the monthly payment times n, and the total interest is that total minus the loan amount.

How the payoff time is calculated

With a fixed monthly payment, the calculator works through the loan one month at a time. Each month, interest is charged on the unpaid balance, and whatever is left of your payment reduces the balance. The final payment is usually smaller, covering only the remaining balance and its interest. The payoff time counts that last payment as a full month. For example, paying $600 a month on a $25,000 loan at 7.5% takes 49 payments, or 4 years 1 month: 48 payments of $600 and a final payment of $251.02.

Your payment has to be larger than the first month's interest (the loan amount times r). Otherwise the balance never goes down, and the calculator asks for a larger payment.

Reading the results

• Monthly payment or payoff time is the answer to the question you chose.
• Total of payments is everything you pay over the life of the loan: principal plus interest.
• Total interest is the cost of borrowing. The breakdown chart shows how it compares with the principal.
• Amortization schedule splits each payment into interest and principal. Early payments are mostly interest; later payments are mostly principal.

Frequently asked questions

What is the monthly payment on a $25,000 loan?

At a 7.5% interest rate over 5 years, the payment is $500.95 a month, with $5,056.92 in total interest. Stretching the same loan to 7 years lowers the payment to $383.46, but total interest rises to $7,210.38.

How long will it take to pay off my loan?

Choose “Find the payoff time” and enter what you pay each month. For example, paying $600 a month on a $25,000 loan at 7.5% clears it in 4 years and 1 month, and total interest drops to $4,051.02, about $1,000 less than a 5-year term.

Does paying more each month save interest?

Yes. Every extra dollar goes to principal, so later interest is charged on a smaller balance. On a $10,000 loan at 8%, paying $300 a month instead of $250 cuts the payoff time from 47 months to 38 and saves about $320 in interest.

Is the interest rate the same as the APR?

Not always. The APR also counts certain fees, such as origination fees, so it is often higher than the interest rate. Enter the interest rate here. If you only know the APR, the result is a close estimate of the payment.

Things to keep in mind

Results assume a fixed rate, payments made on time once a month, and interest calculated monthly on the unpaid balance. Lenders round each payment to the cent, so their schedule can differ from this one by a few cents. Adjustable-rate loans, credit cards with changing balances, and loans with fees or escrow need extra amounts added on top of the payment shown here.