Loan Payment Calculator
Quickly compute loan payment with accurate formulas. See amortization schedules, growth projections, and side-by-side comparisons.
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. Total cost = M × n. Total interest = Total cost - P.
Worked Examples
Example 1: Auto Loan Payment
Problem: You borrow $25,000 for a car at 7% interest for 5 years. What is your monthly payment and total cost?
Solution: Principal (P) = $25,000\nMonthly rate (r) = 7% / 12 = 0.5833%\nNumber of payments (n) = 5 × 12 = 60\n\nM = $25,000 × [0.005833 × (1.005833)^60] / [(1.005833)^60 - 1]\nM = $25,000 × [0.005833 × 1.4176] / [1.4176 - 1]\nM = $25,000 × 0.008268 / 0.4176\nM = $25,000 × 0.019801 = $495.03
Result: Monthly Payment: $495 | Total Interest: $4,702 | Total Cost: $29,702
Example 2: Personal Loan Comparison
Problem: Compare a $15,000 personal loan at 10% for 3 years vs 5 years.
Solution: 3-year term:\nM = $15,000 × [0.00833 × (1.00833)^36] / [(1.00833)^36 - 1]\nM = $484.01/month\nTotal cost = $484.01 × 36 = $17,424\nTotal interest = $2,424\n\n5-year term:\nM = $15,000 × [0.00833 × (1.00833)^60] / [(1.00833)^60 - 1]\nM = $318.71/month\nTotal cost = $318.71 × 60 = $19,123\nTotal interest = $4,123
Result: 3-year: $484/mo ($2,424 interest) | 5-year: $319/mo ($4,123 interest) — longer term costs $1,699 more
Frequently Asked Questions
How is a loan payment calculated?
Loan payments are calculated using the amortization formula: M = P[r(1+r)^n]/[(1+r)^n-1]. Here, M is the monthly payment, P is the principal (amount borrowed), r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. This formula ensures each payment covers some interest and some principal, with the loan fully paid off after n payments. In the early months, a larger portion goes toward interest. As the balance decreases, more goes toward principal. Loan Payment Calculator works for auto loans, personal loans, student loans, and any fixed-rate installment loan. Understanding this formula helps you compare loan offers and see how rate changes affect your total cost.
What factors affect my loan payment amount?
Three primary factors determine your loan payment: the principal amount, the interest rate, and the loan term. A higher principal means higher payments. A higher interest rate increases both the monthly payment and total interest paid. A longer term reduces monthly payments but increases total interest significantly. For example, a $25,000 loan at 7%: over 3 years costs $772/month with $2,780 total interest; over 5 years costs $495/month with $4,700 total interest; over 7 years costs $378/month with $6,728 total interest. Your credit score heavily influences the interest rate offered — a 720+ score might get 5% while a 620 score might get 12% or more, dramatically changing the cost of borrowing.
Should I pay off my loan early?
Paying off a loan early can save significant money on interest. Extra payments go directly toward the principal, reducing the balance that accrues interest. On a $25,000 loan at 7% for 5 years, adding just $100/month extra saves $1,100 in interest and pays off the loan 13 months early. However, check for prepayment penalties first — some loans charge a fee for early payoff. Also consider opportunity cost: if your loan rate is 4% but you could earn 7% investing, the math favors investing. Prioritize paying off high-interest debt (credit cards, personal loans) before low-interest debt (mortgages, federal student loans). The avalanche method — paying minimums on all debts and extra on the highest-rate debt — saves the most money.
How do I interpret the result?
Results are displayed with a label and unit to help you understand the output. Many calculators include a short explanation or classification below the result (for example, a BMI category or risk level). Refer to the worked examples section on this page for real-world context.
How do I get the most accurate result?
Enter values as precisely as possible using the correct units for each field. Check that you have selected the right unit (e.g. kilograms vs pounds, meters vs feet) before calculating. Rounding inputs early can reduce output precision.
Is Loan Payment Calculator free to use?
Yes, completely free with no sign-up required. All calculators on NovaCalculator are free to use without registration, subscription, or payment.