Loan Payment Calculator
How to Calculate a Loan Payment
A loan payment calculator tells you what you will pay each month on any fixed-rate loan - personal loans, student loans, debt consolidation and more. You see the monthly payment, the total you will pay over the life of the loan, and the total interest.
Three inputs are all it asks for. Enter the loan amount you expect to borrow, the APR a lender has quoted or you expect to qualify for, and the term in years. The calculator converts the APR into a monthly rate, runs the standard amortization formula, and returns the fixed monthly payment, the total paid across every installment, and the total interest. Because amortized loans keep the payment constant while the interest-to-principal split shifts each month, one pass through the formula fully describes the loan - no schedule needed to see the bottom line.
Run the default numbers to see it work: $20,000 borrowed at 7% APR for 5 years. The monthly rate is 0.5833%, and the formula produces a payment of about $396.02. Sixty payments later you will have paid $23,761, of which $3,761 is interest. Stretch the same loan to 10 years and the payment falls to roughly $232 - easier on the budget - but total interest climbs to about $7,866, more than double. That trade-off is the entire borrowing decision in miniature: a longer term buys monthly relief at a compounding price, and this calculator prices it exactly.
The tool earns its keep at decision points: comparing two lender offers with different rates, choosing between a 3-year and 5-year personal loan, or stress-testing whether a consolidation loan truly lowers your monthly outflow. Its assumptions are narrow by design. It models a fixed rate and equal payments, with no origination fees, no prepayments, no variable rates and no payment holidays - items real loans attach in the fine print. APR partially captures fees, which is why comparing offers on APR rather than the headline rate matters. For a payment-by-payment breakdown, the amortization calculator picks up where this one stops.
Frequently Asked Questions
How is a monthly loan payment calculated?
With the amortization formula: M = P × r(1 + r)^n / ((1 + r)^n - 1), where P is the loan amount, r is the monthly interest rate (APR/12) and n is the total number of payments. The result is the fixed amount you pay each month.
What is APR?
APR (annual percentage rate) is the yearly cost of borrowing, including interest and most fees, expressed as a percentage. It is the number to compare across lenders, because it reflects the true cost better than the nominal rate alone.
Does a longer loan term mean lower payments?
Yes, spreading the loan over more months lowers the monthly payment, but you pay far more total interest. For example, a $20,000 loan at 7% costs about $396/month for 5 years but only $233/month for 10 years - and nearly double the total interest.
Can I pay off a loan early?
Usually yes, and every extra dollar goes to principal, cutting the interest you had agreed to pay. Federal law prohibits prepayment penalties on most consumer loans, but some personal and auto loans still include them, so check your agreement first. Even one extra payment a year shortens a 5-year term noticeably.
What is a good interest rate on a personal loan?
Rates follow your credit score and the market. Strong credit often qualifies for single-digit APRs, while subprime borrowers may see 20% or more. A useful benchmark: if a quoted rate sits several points above what a local credit union offers for the same term, keep shopping.
Does the monthly payment include fees?
No - the calculator prices pure principal and interest from the APR you enter. Origination fees, documentation charges and insurance add-ons are separate. Because those fees effectively raise your borrowing cost, compare loans using APR, which folds most of them in.