How to use the calculator
- Loan amount: the sum you borrow. Pick the currency from the selector next to it.
- Interest rate: the nominal annual rate in percent, as written in the loan offer (not the APR).
- Loan term: switch between years and months, then enter the length of the loan, up to 50 years.
The results update as you type: the monthly payment, the total interest, the total amount paid, and a bar that shows how much of the total is principal and how much is interest.
Open the amortization schedule to see every payment broken down into interest, principal and remaining balance. You can view it month by month or summarized by year.
The optional Extra payments section lets you enter an Extra payment per month on top of the regular payment. The calculator then shows how much interest you save and how many months earlier the loan is paid off.
The page address changes with your inputs, so you can bookmark a calculation or share it with a link.
The formula
The calculator assumes a fixed rate, equal monthly payments and standard amortization (each payment is the same, and covers that month’s interest first, then reduces the balance):
- M: the monthly payment
- P: the principal, the amount borrowed
- r: the monthly interest rate, equal to the annual rate divided by 12 (6.5% a year becomes 0.065 / 12)
- n: the number of monthly payments (5 years = 60)
Each month, the interest is the remaining balance · r. The rest of the payment goes to principal. If the rate is 0%, the formula simplifies to P / n.
Worked example
You borrow $20,000 at 6.5% a year over 5 years.
- Monthly rate: r = 0.065 / 12 = 0.0054167
- Number of payments: n = 5 · 12 = 60
- (1 + r)−60 = 0.723161, so the denominator is 1 − 0.723161 = 0.276839
- Numerator: 20,000 · 0.0054167 = 108.33
- Monthly payment: 108.33 / 0.276839 = $391.32
Over 60 months you pay $23,479.38 in total, of which $3,479.38 is interest.
Here is how the first two payments split:
| Month | Payment | Interest | Principal | Balance |
|---|---|---|---|---|
| 1 | $391.32 | $108.33 | $282.99 | $19,717.01 |
| 2 | $391.32 | $106.80 | $284.52 | $19,432.49 |
The interest in month 1 is simply $20,000 · 0.0054167. In month 2 it is calculated on the lower balance, so it drops a little and the principal share grows. Over the years the effect adds up: you pay $1,196.98 of interest in year 1 and only $161.24 in year 5.
What drives the cost of a loan
Three numbers decide how much a loan really costs you:
- The rate. At 8.5% instead of 6.5%, the same $20,000 over 5 years costs $410.33 a month and $4,619.84 in interest, about $1,140 more.
- The term. Stretching the loan lowers the payment but raises the total. Over 3 years the payment is $612.98 and interest is $2,067.28; over 7 years the payment drops to $296.99, but interest climbs to $4,947.05.
- The amount. Interest is proportional to the balance, so borrowing less is the most direct saving of all.
Remember that the rate in the calculator is the nominal rate. Lenders may also charge origination fees, insurance or other costs, which show up in the APR. Two loans with the same nominal rate can have different APRs, so check both when you compare offers.
How extra payments help
Every dollar you pay on top of the regular payment goes straight to principal. A lower balance means less interest next month, and that saving compounds over the rest of the loan.
Take a $100,000 mortgage at 5% over 30 years. The monthly payment is $536.82 and total interest is $93,255.78. Adding just $100 a month:
- pays the mortgage off in 256 months instead of 360, that is 104 months (8 years and 8 months) earlier;
- saves $30,580.25 in interest.
Extra payments work best early in the loan, when the balance and the interest on it are highest. Before you start, check your loan contract: some lenders limit prepayments or charge a fee for them.
A note on the results
The figures are estimates based on the values you enter and a standard amortization model. The lender’s official documents, such as the loan agreement and its repayment schedule, always prevail.