Loan Calculator

How loan payments are calculated

A standard fixed-rate loan spreads principal and interest across equal scheduled monthly payments. The calculation uses the original amount borrowed, the annual interest rate converted to a monthly rate, and the total number of payments. When the interest rate is zero, the calculation is simply principal divided by the number of months.

Although the scheduled payment is generally level, its composition changes. Early in the term, the outstanding balance is high and more of each payment goes toward interest. As the balance falls, the interest charge declines and more goes toward principal. The amortization table makes that transition visible month by month.

Principal, interest and loan term

Principal versus interest

Principal is the amount you borrow. Interest is the price of borrowing it over time. Comparing only monthly payments can hide an expensive loan: two offers may have similar monthly costs but very different total interest because their terms or rates differ.

How the rate affects payments

A higher rate increases both the monthly payment and lifetime interest when all other inputs stay the same. Even a modest rate difference can matter over a long mortgage-sized term. Compare offers using the same amount and repayment period, then account separately for fees and any difference between interest rate and APR.

How the term affects total cost

A longer term normally reduces the required monthly payment, but it keeps the balance outstanding for more time. That often increases total interest substantially. A shorter term demands more cash each month but generally builds equity faster and reduces borrowing cost.

Using the amortization schedule

The annual summary is useful for comparing how quickly principal falls from year to year. The monthly schedule provides the exact modeled split for every payment. Download the CSV if you want to compare scenarios in a spreadsheet. The final payment is adjusted by the calculator so floating-point rounding cannot leave a tiny negative balance or a displayed value of negative zero.

This tool assumes equal monthly payments, a fixed nominal annual rate, no additional payments and no fees. It does not model variable rates, daily interest, taxes, insurance, escrow, balloon payments or lender-specific rounding. Use the lender’s official disclosure and repayment schedule before making a financial decision.

How to compare loan offers

1. Use the same principal and term for each offer.
2. Compare the monthly payment and total interest together.
3. Review APR, origination fees and mandatory products outside this calculator.
4. Confirm whether extra payments are allowed without a penalty.
5. Keep an affordable buffer rather than treating the maximum possible payment as a target.

Currency selection changes formatting only. It does not perform exchange-rate conversion. Results are estimates and do not represent an approval, quote or promise that a lender will offer particular terms.

Frequently asked questions