Payment Calculator
Calculate payment amounts for loans and mortgages. Enter values for instant results with step-by-step formulas.
Formula
M = P × [r(1+r)^n] / [(1+r)^n - 1]
Monthly payment (M) equals principal (P) times the monthly rate factor. This formula ensures equal payments that fully amortize the loan over the term.
Worked Examples
Example 1: Auto Loan Payment Calculation
Problem:Calculate the monthly payment for a $28,000 car loan at 5.9% APR for 60 months.
Solution:Using the payment formula:\nP = $28,000\nr = 5.9% / 12 = 0.4917%\nn = 60 months\n\nM = $28,000 × [0.004917(1.004917)^60] / [(1.004917)^60 - 1]\nM = $28,000 × [0.004917 × 1.3426] / [1.3426 - 1]\nM = $28,000 × 0.006601 / 0.3426\nM = $540.12/month\n\nTotal: $540.12 × 60 = $32,407.20\nInterest: $32,407.20 - $28,000 = $4,407.20
Result:Monthly payment: $540.02 | Total interest: $4,401.05
Example 2: Impact of Extra Payments
Problem:How much can you save by paying $100 extra monthly on a $20,000 loan at 7% for 48 months?
Solution:Standard payment: $478.92/month\nWith $100 extra: $578.92/month\n\nWithout extra payments:\n- 48 months to pay off\n- Total interest: $2,988.12\n\nWith $100 extra:\n- Paid off in 39 months\n- Total interest: $2,386.25\n\nSavings:\n- 9 months earlier payoff\n- $601.87 interest saved
Result:Save $588.12 in interest and pay off 9 months early
Example 3: Comparing Loan Terms
Problem:Compare 36-month vs 60-month terms for a $15,000 loan at 6.5% APR.
Solution:36-month term:\nPayment = $459.74\nTotal = $16,550.64\nInterest = $1,550.64\n\n60-month term:\nPayment = $293.49\nTotal = $17,609.40\nInterest = $2,609.40\n\nDifference:\nMonthly savings: $166.25 lower payment\nExtra cost: $1,058.76 more interest
Result:60-month saves $166/mo but costs $1,059 more total
Frequently Asked Questions
How is a loan payment calculated?
Monthly loan payments are calculated using the formula: M = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate, and n is the number of payments. This ensures each payment covers interest charges while gradually reducing the principal balance over the loan term.
What factors affect my monthly payment amount?
Three main factors determine your payment: 1) Loan amount (higher principal = higher payment), 2) Interest rate (higher rate = higher payment), 3) Loan term (longer term = lower monthly payment but more total interest). Other factors include fees, insurance requirements, and whether the rate is fixed or variable.
What happens if I miss a payment?
Missing payments has serious consequences: late fees (typically $25-50), interest continues accruing, negative credit report impact after 30 days late, potential default after 90+ days. If you anticipate trouble, contact your lender immediately - many offer hardship programs, deferment, or modified payment plans.