Loan Calculator
Calculate your monthly loan payment, total interest, and total cost.
How to use this tool
- Enter loan amount, annual rate and term in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your monthly payment and the full breakdown beneath it.
Calculate your monthly loan payment, total interest, and total cost.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
Monthly payment M = P × r(1 + r)n ÷ [(1 + r)n − 1]
When rate = 0: M = P ÷ n.
Where P = principal, r = monthly rate (annual rate ÷ 12 ÷ 100), n = total payments (years × 12).
Total interest = M × n − P. Total paid = M × n.
How it works
This calculator uses the standard amortisation formula to compute the fixed monthly repayment that fully retires a loan at the specified interest rate over the chosen term, with each instalment allocated first to monthly interest and the remainder to principal reduction.
At a zero interest rate the formula reduces to a straight principal split. Results assume a fixed rate and equal monthly payments; fees, prepayment penalties, or variable-rate adjustments are not included.
Worked example
- Inputs: $12,000 loan, 0% annual rate, 1-year term.
- Number of payments: n = 1 × 12 = 12.
- Because rate = 0, use simplified formula: M = 12,000 ÷ 12 = $1,000.
- Total paid = 1,000 × 12 = $12,000. Total interest = $12,000 − $12,000 = $0.
Monthly payment = $1,000 | Total interest = $0 | Total paid = $12,000
Common mistakes to avoid
- Entering the annual interest rate without dividing by 12 to get the monthly rate — using the annual rate directly overstates monthly payments dramatically.
- Forgetting to enter the loan term in months rather than years when the field expects months — a 30-year mortgage entered as 30 instead of 360 computes as a 30-month loan.
- Ignoring fees, PMI, and property taxes when interpreting the monthly payment output — the formula shows principal-and-interest only.
Key terms
- Amortisation
- The gradual repayment of a loan through scheduled instalments that each cover accrued interest and a portion of the principal balance.
- Principal
- The original borrowed amount on which interest is charged.
- Monthly payment
- The fixed amount paid each month that, over the loan term, repays both principal and interest in full.
- Annual Percentage Rate (APR)
- The yearly cost of borrowing expressed as a percentage; the calculator uses this divided by 12 for the monthly rate.
- Term
- The agreed loan duration in years (converted to months for calculation); longer terms reduce monthly payments but increase total interest paid.
Frequently asked questions
- What happens to total interest if I make extra principal payments?
- Extra payments reduce the outstanding principal, which reduces the interest charged in subsequent months. Even one extra payment per year can cut years off a 30-year mortgage.
- Why does my first payment go mostly to interest?
- Amortization front-loads interest because interest is calculated on the remaining balance. Early in the loan the balance is highest, so more of each payment covers interest rather than principal.
- Does the calculator account for compound interest?
- Standard mortgage amortization compounds monthly — interest accrues on the outstanding balance each month. The formula M = P x r(1+r)^n / ((1+r)^n - 1) incorporates this.