Loan Payment Calculator
Calculate your monthly loan payment, total amount paid, and total interest. Works for personal loans, auto loans, student loans, and more.
The Loan Payment Formula
Monthly loan payments are calculated using the amortization formula:
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
Where: M = monthly payment, P = principal (loan amount), r = monthly interest rate (annual rate ÷ 12), n = total number of payments (years × 12).
How Amortization Works
Each monthly payment covers two things: interest owed on the remaining balance, and a portion of the principal. In the early months, most of your payment goes toward interest. Over time, as the principal shrinks, more of each payment reduces the balance.
Example: $10,000 at 6% for 3 Years
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $304.22 | $254.22 | $50.00 | $9,745.78 |
| 12 | $304.22 | $267.86 | $36.36 | $7,049.68 |
| 36 | $304.22 | $302.70 | $1.52 | $0.00 |
Tips to Reduce Total Interest
- Make extra payments — applying even $50 extra per month directly reduces principal
- Shorter term — a 3-year loan costs much less interest than a 5-year loan, even at the same rate
- Lower rate — improving your credit score before applying can save thousands
- Bi-weekly payments — paying half the monthly amount every two weeks makes 13 full payments per year instead of 12