Why use this calculator
A loan repayment calculator helps you understand the true cost of borrowing before you commit. By entering the loan amount, interest rate, and term, you can instantly see your monthly payment and total interest costs. This empowers you to compare different loan offers, negotiate better terms, and budget effectively. Whether you're considering a personal loan, car loan, or any other type of financing, knowing your exact repayment obligations prevents financial surprises down the road.
How to use it
Enter your loan amount (the total you plan to borrow), the annual interest rate offered by your lender, and the loan term in years. Click calculate to see your monthly payment breakdown. Try adjusting the term length to see how shorter terms reduce total interest while increasing monthly payments, or vice versa.
The formula
The monthly payment is calculated using the standard amortization formula: M = P × [r(1+r)^n] / [(1+r)^n - 1], where M is the monthly payment, P is the principal loan amount, r is the monthly interest rate (annual rate / 12), and n is the total number of monthly payments (years × 12). This formula assumes fixed-rate payments over the life of the loan.
Worked examples
A $250,000 loan at 6.5% for 30 years
Monthly payment of $1,580.17 with $318,861.22 total interest
A $20,000 car loan at 5% for 5 years
Monthly payment of $377.42 with $2,645.48 total interest
When people use it
- Comparing mortgage offers from different lenders
- Planning monthly budgets before taking a loan
- Deciding between shorter and longer loan terms
- Evaluating refinancing options
Tips
- A shorter loan term means higher monthly payments but significantly less interest overall
- Even a 0.5% difference in interest rate can save thousands over the life of a loan
- Consider making extra payments to reduce your principal faster
- Factor in all fees and closing costs when comparing loan offers
Questions people ask
- How does the interest rate affect my monthly payment?
- Higher interest rates increase your monthly payment and the total cost of the loan. For example, on a $250,000 loan over 30 years, a 1% increase in rate can add over $150 to your monthly payment and tens of thousands to total interest.
- Should I choose a shorter or longer loan term?
- Shorter terms have higher monthly payments but save significantly on total interest. A 15-year mortgage typically saves over 50% in interest compared to a 30-year term, though the monthly payment will be considerably higher.
- What is amortization?
- Amortization is the process of spreading loan payments over time. In the early years, more of your payment goes toward interest. As the loan matures, more goes toward principal reduction.