Loan Calculator
Monthly payment, total interest & cost of any loan
Comparing a car loan, personal loan or any fixed-rate borrowing? Enter the amount, rate and term to see your monthly payment and exactly how much interest you'll pay.
How amortisation actually works
A monthly payment calculator and a loan interest calculator are the same tool viewed from two ends: one gives the payment, the other gives what that payment costs you.
A fixed loan is amortised: the payment stays the same every month, but what it is made of changes completely. Each month you pay interest on the remaining balance first, and whatever is left over goes to principal.
Because the balance is highest at the start, the early payments are mostly interest and barely dent the debt. As the balance falls, less of each payment goes to interest and more to principal, so the loan pays down slowly at first and then accelerates. On a $25,000 loan at 7.5% over five years the payment is $500.95 throughout, but the first payment includes $156 of interest and the last includes about $3.
This is why extra payments early are worth far more than extra payments late. A dollar of extra principal in year one removes five years of interest on that dollar; the same dollar in year four removes almost none.
Payment and interest by term
| Term | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 3 years | $777.66 | $2,995.60 | $27,995.60 |
| 4 years | $604.47 | $4,014.68 | $29,014.68 |
| 5 years | $500.95 | $5,056.92 | $30,056.92 |
| 6 years | $432.25 | $6,122.20 | $31,122.20 |
| 7 years | $383.46 | $7,210.38 | $32,210.38 |
Stretching from three years to seven cuts the payment by $394 a month and costs an extra $4,215 in interest — the total interest more than doubles. This is the trade lenders present as "a more affordable payment", and it is worth seeing in those terms.
What the rate costs you
| APR | Monthly payment | Total interest |
|---|---|---|
| 5% | $471.78 | $3,306.85 |
| 7.5% | $500.95 | $5,056.92 |
| 10% | $531.18 | $6,870.57 |
| 15% | $594.75 | $10,684.90 |
| 20% | $662.35 | $14,740.83 |
| 25% | $733.78 | $19,026.99 |
Notice how the monthly payment moves far less than the total cost. Going from 5% to 25% raises the payment by 56% but raises the interest by 475%. A payment-shaped view of borrowing systematically hides what high rates cost, which is exactly why lenders quote payments.
APR is not the interest rate
The interest rate is what accrues on the balance. The APR also folds in origination fees, points and some closing costs, expressed as an annual percentage. Two loans with the same rate can have very different APRs, and the APR is the fairer comparison — it is required by law in the US precisely so borrowers can compare offers on one number.
- Watch for origination fees, often 1 to 8% deducted from the amount you receive. A "$25,000 loan" with a 5% fee puts $23,750 in your account while you repay the full $25,000.
- Check for prepayment penalties. Rare on personal loans, common on some mortgages and auto loans, and they undo the value of paying early.
- Beware precomputed interest. Most loans are simple-interest, where paying early genuinely saves money. With precomputed interest the total is fixed at signing and early payoff saves you little.
- Ignore "total cost of credit" comparisons across different terms without also comparing the rate. A longer loan always costs more in total; that alone does not make it a worse deal.
Paying extra
Any extra payment goes straight to principal, which removes all the future interest that principal would have accrued. The effect is largest early and it compounds: shorten the balance now and every subsequent month has less interest to pay.
Two practical points. Tell the lender in writing that extra money is principal only, or many will simply apply it to next month's payment and you get no benefit. And check the loan is simple-interest before making a plan around it.
If the debt is on a credit card rather than a fixed loan, the credit card payoff calculator handles the revolving case, and the debt payoff calculator compares snowball and avalanche across several debts.
Estimate only — not financial advice. Your lender's fees and terms will differ.
How this loan calculator works out its numbers
The monthly payment is the standard amortisation formula: P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), where r is the monthly rate and n the number of payments. Total paid is payment × n, and total interest is that minus the principal.
- Simple-interest, fixed-rate assumption. Interest accrues on the outstanding balance and the rate never changes. Precomputed-interest loans, variable rates and balloon structures behave differently.
- Rate means the nominal interest rate, not APR. Enter the APR instead if you want fees included, though that slightly overstates the monthly interest accrual.
- Not included: origination fees, prepayment penalties, late fees, insurance products sold alongside the loan, and any effect of extra payments.
- Payments are assumed to be made on time and in full. A missed payment changes the schedule and usually adds fees.
Reviewed September 2026.
Figures reviewed . Every worked example on this page is checked against the calculator above.
Loan Calculator: frequently asked questions
How is a monthly loan payment calculated?
With the amortisation formula, which finds the fixed payment that clears the balance over the term. Each month interest is charged on the remaining balance and the rest of the payment reduces principal, so the split shifts as the loan progresses.
What is the monthly payment on a $25,000 loan?
About $500.95 a month at 7.5% over five years, with $5,056.92 of total interest. Over three years the payment rises to $777.66 but the interest falls to $2,995.60.
Does a longer loan term cost more?
Yes, substantially. On $25,000 at 7.5%, going from three years to seven cuts the payment by $394 a month and more than doubles the interest, from $2,996 to $7,210.
Why is most of my early payment interest?
Because interest is charged on the remaining balance, which is highest at the start. The payment is fixed, so whatever is left after interest goes to principal — very little at first, and steadily more as the balance falls.
What is the difference between APR and interest rate?
The interest rate is what accrues on the balance. The APR also includes origination fees, points and some closing costs, so it is the fairer comparison between offers. Two loans at the same rate can have quite different APRs.
Does paying extra on a loan save money?
On a simple-interest loan, yes, and most of the saving comes from paying early. Extra money goes straight to principal, removing all the future interest that principal would have accrued. Specify in writing that it is principal only.
What is an origination fee?
A fee charged for making the loan, often 1 to 8%, usually deducted from the amount you receive. A $25,000 loan with a 5% fee pays out $23,750 while you repay the full $25,000, which is why the APR is higher than the rate.
Should I worry about prepayment penalties?
Check for them before planning to pay early. They are rare on personal loans but appear on some auto loans and mortgages, and they can cancel out most of the benefit of early repayment.