Loan Calculator

Calculate the monthly payment, total interest, and total cost of any fixed-rate installment loan — personal, auto, student, or otherwise.

How a loan payment is calculated

Installment loans use the same amortization formula as a mortgage. Given a principal P, monthly rate r, and term n in months, the monthly payment M is:

M = P · r / (1 − (1 + r)−n)

The same dollar amount comes out of your account each month. Early on, most of it goes to interest. Late in the term, most of it goes to principal. That asymmetry is why paying extra in the first year of a loan reduces total interest dramatically — every extra dollar of principal saves you years of compounded interest.

Worked example

Borrow £25,000 at 8.5% APR for 60 months. The monthly rate is 8.5 ÷ 12 ÷ 100 = 0.00708. Payment = 25,000 × 0.00708 ÷ (1 − 1.00708⁻⁶⁰) ≈ £513 per month. Over five years you'll pay about £30,790 — meaning £5,790 of pure interest. If the same loan were 36 months instead of 60, the monthly payment would jump to about £789 but total interest would drop to about £3,400. Shorter loans cost more per month and far less overall.

APR vs interest rate

US lenders publish an APR (Annual Percentage Rate) that bundles the interest rate with mandatory fees, expressed as an annual percentage. Two loans with the same APR can have different headline interest rates if their fee structures differ. This calculator treats the rate you enter as the periodic interest rate only — if you want to model APR with fees, add the fees to the principal first.

Should you pay off a loan early?

Paying extra principal on a loan is mathematically equivalent to earning a guaranteed, tax-free return at the loan's interest rate. If your auto loan is at 8.5% and you have no debt at a higher rate, paying it down beats almost any low-risk investment. But check first: some loans have prepayment penalties, especially older auto loans and some mortgages, that can erase the savings.

Variable vs fixed rate

This calculator assumes a fixed rate for the entire term. Some personal loans, most credit cards, and many student loans carry variable rates that float against a benchmark like SOFR or the prime rate. To estimate the payment after a rate change, re-run the calculation with the current remaining balance and the new rate as the starting point.

Disclaimer

This calculator is for educational purposes only. Real loan quotes depend on credit profile, income verification, collateral, and lender margin. Always confirm exact terms with a lender before signing.