M = P × [r(1+r)^n] / [(1+r)^n − 1]M is the monthly payment, P is the loan principal, r is the monthly interest rate (annual rate divided by twelve), and n is the total number of monthly payments (the loan term in years multiplied by twelve). The formula assumes a fixed-rate loan with equal monthly payments, also called a level-payment or amortizing loan. When the interest rate is zero, the formula simplifies to M = P ÷ n.
Enter your loan amount, interest rate, and term to get your monthly payment and total interest in real time.
Enter your loan amount, interest rate, and repayment term to see your monthly payment and total interest instantly. Uses the same amortization formula banks use, so results match real-world quotes. Works for personal loans, auto loans, and student loans.
A loan calculator takes three numbers you know (what you are borrowing, the rate, and how long you have) and turns them into the one number you actually care about: what leaves your account each month. The math behind it is called the amortization formula. Your bank uses it, your credit union uses it, and the finance desk at the dealership uses it too. It is not complicated, but lenders rarely show their work. This calculator shows the monthly payment, the total interest over the life of the loan, and the full cost of borrowing. Use it to check a lender quote, compare two offers side by side, or work backward from a monthly budget to find the loan size you can afford. The formula is identical for personal loans, auto loans, student loans, and the principal-plus-interest portion of a mortgage.
A familiar scenario
Walking through an example
Example: $15,000 car loan at 7% APR for 3 years
- 1Principal P = $15,000
- 2Monthly rate r = 7% ÷ 12 = 0.5833%
- 3Number of payments n = 3 × 12 = 36
- 4M = 15,000 × [0.005833 × (1.005833)³⁶] / [(1.005833)³⁶ − 1]
- 5(1.005833)³⁶ = 1.23293
- 6M = 15,000 × (0.007192 / 0.23293) = 15,000 × 0.030877
- 7M = $463.16 per month
- 8Total paid over 36 months = $463.16 × 36 = $16,673.76
- 9Total interest = $16,673.76 − $15,000 = $1,673.76
When this comes up
Where you would actually use this
- Checking a dealership quote: Car salespeople sometimes pitch a quote around a low monthly payment by stretching the term or folding fees into the principal. Plug their numbers in before you sign. If the result does not match their figure within a few dollars, ask them to break it down.
- Comparing two loan offers: Lender A offers 6.5% over 4 years. Lender B offers 7.2% over 5 years. The monthly payment looks lower with Lender B, but the total interest is higher. Compare the Total Interest line, not the monthly payment. That is the real cost.
- Working backward from a budget: If $400 per month is your ceiling for a car loan, adjust the loan amount until the payment lands at $400. The result shows the largest loan you can afford at that rate and term.
- Estimating debt consolidation savings: Add up your existing balances, then enter the rate your bank quotes on a consolidation loan. Compare the new payment to the sum of your current payments, and compare total interest over the new term to what you would otherwise pay.
Where it trips people up
Things people get wrong
- Mixing up APR and interest rate: When comparing offers, use APR (which includes fees). A low advertised rate with high origination fees can produce a higher APR than a higher quoted rate with no fees.
- Stretching the term to shrink the payment: Going from a 4-year to a 7-year loan drops the monthly payment but typically doubles the total interest. The lower payment feels better short-term. The total-interest line tells the real story.
- Forgetting fees and required insurance: This calculator covers principal and interest only. Auto loans add gap insurance and registration fees. Mortgages add property tax, homeowner insurance, and PMI if your down payment is under 20%. Budget those separately.
- Ignoring prepayment penalties: Some loans charge a fee if you pay off the balance early. If you plan to refinance or pay ahead of schedule, check the agreement for prepayment penalty language before signing.
The math
The formula, formally
- 1Enter the loan amount (the principal): the cash the lender disburses to you.
- 2Enter the annual interest rate as a percentage. For a quoted APR, use the number before the percent sign.
- 3Enter the term in years. Auto loans typically run 3 to 7 years, personal loans 1 to 5, mortgages 15 to 30.
- 4The calculator converts the annual rate to a monthly rate, and the term to a total number of monthly payments.
- 5It applies the amortization formula to compute your fixed monthly payment.
- 6It also shows total paid (payment times months) and total interest (total paid minus principal).
Terms to know
Glossary
| Term | Definition |
|---|---|
| Amortization | Paying off a loan with equal periodic payments. Each payment covers some interest (calculated on the remaining balance) and some principal. Early payments are mostly interest. Later payments are mostly principal. |
| APR (Annual Percentage Rate) | The interest rate plus mandatory fees, expressed as a yearly percentage. US lenders must disclose APR under the Truth in Lending Act. For simple loans with no fees, APR and the interest rate are the same number. |
| Principal | The amount the lender disburses to you before any interest is charged. On day one, principal is what you owe. Every payment you make reduces the principal and pays some interest on the remaining balance. |
| Compound interest | Interest calculated on accumulated interest, not just the original principal. Standard amortizing loans compound monthly: interest is calculated on the remaining balance at the start of each month. Some credit cards compound daily, which accrues slightly faster. |
Expert advice
Pro tips
- Compare total interest, not monthly payments: The monthly payment tells you what fits this month. Total interest tells you what the loan actually costs. When comparing offers, sort by total interest first, then confirm the monthly payment is manageable.
- Make one extra payment per year: One extra payment annually can shave 4 to 5 years off a 30-year mortgage. Every extra dollar reduces the principal, which cuts the interest charged on every payment that follows.
- Refinance when rates drop by 1% or more: Refinancing typically makes sense when the new rate is at least one percentage point lower and you plan to stay in the loan long enough to recoup the closing costs. Re-run this calculator with the new rate to see the savings.
- Lock the rate when mortgage shopping: Rates can shift 0.25% in a week. If you see a rate you like, ask about a rate lock (usually free for 30 to 60 days). That locks the number at application so it holds at closing.
Common questions
Frequently asked questions
Quick reference
Monthly Payment by Interest Rate
Based on a $10,000 loan over 5 years (60 months)
| Interest Rate | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 3.0% | $179.69 | $793 | $10,793 |
| 5.0% | $188.71 | $1,323 | $11,323 |
| 6.5%typical | $195.66 | $1,740 | $11,740 |
| 8.0% | $202.76 | $2,165 | $12,165 |
| 10.0% | $212.47 | $2,748 | $12,748 |
| 12.0% | $222.44 | $3,347 | $13,347 |
For related calculations, try the Mortgage Calculator, Compound Interest, or Simple Interest. Browse all Calculator Online calculators for the full catalog.
Methodology
This calculator uses the standard loan calculator formula. Results match those from established financial, scientific, and health references.
Reviewed by
Calculator Online Editorial Team. All formulas verified against authoritative sources before publication.
Last updated
2026-05-19
Sources & References
- Consumer Financial Protection Bureau, Loan Estimate Explainer
Official US government guide to understanding the disclosures lenders give you.
- Federal Reserve, Consumer Credit Statistical Release (G.19)
Monthly Federal Reserve dataset on outstanding consumer credit and average rates.
- Investopedia, Amortization Formula Walkthrough
A clear textual derivation of the same formula used on this page.