Calculate monthly payments, total interest, and full amortization schedule.
| # | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| Enter loan details above | ||||
The monthly loan payment formula is: Payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where P is the loan principal (amount borrowed), r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. For example, a $10,000 loan at 6% annual interest over 60 months gives a monthly rate of 0.5% and a monthly payment of approximately $193.33.
An amortization schedule is a complete table showing every payment over the life of a loan, broken down into the portion going toward principal and the portion going toward interest. In the early months of a loan, the vast majority of your payment goes toward interest rather than reducing your balance. This is because interest is calculated on your remaining balance — which is highest at the start. As you pay down the principal, more of each payment goes toward the actual balance. This is why making extra payments early in a loan term has such a dramatic effect on total interest paid.
There are several proven strategies to pay less interest over the life of a loan. Making even small extra payments toward the principal each month significantly reduces total interest — on a 30-year mortgage, an extra $100 per month can save tens of thousands of dollars. Refinancing to a lower interest rate when rates drop is another powerful tool, though closing costs need to be factored in. Choosing a shorter loan term means higher monthly payments but dramatically less total interest. Making biweekly payments instead of monthly payments results in one extra full payment per year, which can cut years off a mortgage.
Different loan types have different typical interest rates and terms. Personal loans usually carry higher rates (6–36%) with shorter terms of 1–7 years because they are unsecured. Mortgages typically have lower rates (3–8%) with longer terms of 15–30 years because the home serves as collateral. Auto loans fall in between, with rates of 4–15% and terms of 2–7 years. Our loan calculator works for all three — just enter the correct principal, rate, and term for your specific loan.
A shorter loan term means higher monthly payments but significantly less total interest paid. A longer term means lower monthly payments but much more interest over time. For example, a $20,000 car loan at 6% over 36 months costs about $608 per month and $1,900 in total interest. The same loan over 72 months costs $332 per month but $3,900 in total interest — more than double. Use our loan calculator to compare different terms and find the balance that works for your budget.
Lenders use credit scores to determine your interest rate. Generally, a score above 740 qualifies you for the best rates. Scores of 670–739 are considered good and will still get competitive rates. Scores of 580–669 are considered fair and will result in higher rates. Below 580 is considered poor credit, which either results in very high rates or loan rejection. Even a 2% difference in interest rate makes a significant difference over the life of a loan — use our calculator to see exactly how much.