Payment Calculator
$
5.00%
5 yrs
Monthly Payment$471.78
Total Interest$3,306.85
Total Paid$28,306.85
This payment calculator works out the fixed monthly payment for any installment loan once you give it the amount borrowed, the annual interest rate, and the term in years. It uses the standard amortizing-loan formula, so the single payment it returns covers both interest and principal and would clear the balance exactly at the end of the term. Alongside the monthly figure it sums the total interest you will pay and the grand total of all payments, making it easy to compare financing options side by side.
Formula
M = P · r(1 + r)ⁿ / ((1 + r)ⁿ − 1)
- M
- Fixed monthly payment
- P
- Loan amount (principal borrowed)
- r
- Monthly interest rate = annual rate ÷ 12 ÷ 100
- n
- Total number of monthly payments = term in years × 12
How it works
- Enter the loan amount, the annual interest rate as a percentage, and the loan term in years. The term is converted to a number of monthly payments (years × 12) and the rate to a monthly rate.
- The calculator applies the fixed-rate annuity formula to find the level monthly payment that fully repays the loan over those months. If the rate is zero, it simply divides the amount evenly across the months.
- It then reports the monthly payment, the total interest (all payments minus the original amount), and the total amount paid over the full term.
Worked example
Borrowing $25,000 at a 7% annual interest rate over a 5-year term.
- Monthly rate r = 7 ÷ 12 ÷ 100 = 0.0058333; number of payments n = 5 × 12 = 60.
- M = 25,000 × 0.0058333 × 1.0058333⁶⁰ ÷ (1.0058333⁶⁰ − 1) = $495.03.
- Total paid: 495.03 × 60 = $29,701.80; total interest: 29,701.80 − 25,000 = $4,701.80.
The monthly payment is $495.03, total interest is $4,701.80, and the total amount repaid is $29,701.80.
Frequently asked questions
- What kinds of loans does this payment calculator handle?
- Any fixed-rate, fully amortizing installment loan, including personal loans, auto loans, student loans, and home loans. As long as the rate is fixed and the payment is level, the formula applies regardless of the loan's purpose.
- Why is the total paid higher than the amount I borrowed?
- The difference is interest. Each payment covers the interest accrued on the outstanding balance plus a portion of principal, so over the full term the interest adds up on top of repaying the original amount you borrowed.
- How does the loan term affect my payment?
- A longer term spreads the principal over more months, lowering each monthly payment but increasing the total interest paid. A shorter term raises the monthly payment but reduces the total interest because the balance is repaid faster.
- Does this include fees, insurance, or other charges?
- No. It calculates only principal and interest from the amount, rate, and term you enter. Origination fees, insurance, and taxes are not included, so your actual cost may be higher depending on the loan.