How loan calculator works
This loan calculator uses the standard amortization formula to work out fixed monthly payments. For a loan with principal P, monthly interest rate r, and n monthly payments, the payment is P times r times (1+r)^n divided by ((1+r)^n minus 1). If the rate is zero, it simply divides the principal by the number of payments.
Enter the amount you are borrowing, the annual interest rate as a percentage, and the loan term in years. The calculator converts the annual rate to a monthly rate (dividing by 12), counts the total number of monthly payments, and computes what you will pay each month, the total amount repaid over the full term, and the total interest paid.
The result assumes a fixed-rate loan with equal monthly payments. It does not account for variable rates, balloon payments, or fees. Use it as a planning estimate; your lender may differ slightly due to rounding or additional costs like insurance and taxes.
Frequently asked questions
How is the monthly loan payment calculated?
The formula is P times r times (1+r)^n divided by ((1+r)^n minus 1), where P is the principal, r is the monthly interest rate (annual rate divided by 12 divided by 100), and n is the number of monthly payments. The calculator applies this automatically.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal. APR (annual percentage rate) includes the interest rate plus lender fees and other costs, so it is usually higher. Enter the interest rate here; if you know the APR, using that gives a more accurate total cost.
How do I calculate total interest on a loan?
Total interest equals (monthly payment times number of payments) minus principal. The calculator shows this automatically. For a 200000 dollar loan at 5 percent over 30 years, you would pay about 186510 in interest.
Can I use this for any type of loan?
Yes. It works for any fixed-rate loan with equal monthly payments: mortgages, car loans, personal loans, and student loans. For variable-rate loans, it gives an estimate based on the current rate.