Loan Payment Calculator
Calculate the monthly payment on a fixed-rate installment loan, the total repaid, the interest cost and the amortization table.
Updated Formula covered by automated tests
Car dealers, banks and online lenders tend to advertise the monthly installment, not the total cost. This tool works the other way round: give it the amount you would borrow, the annual interest rate and the repayment period, and it shows the installment along with the full amount repaid and the interest portion, so two offers with different terms can be compared on what they actually cost.
It covers any fixed-rate installment loan repaid in equal monthly amounts: auto loans, unsecured personal loans, debt consolidation loans, furniture or appliance financing and most private student loans. The month-by-month table shows how the balance falls, which is useful when you want to know what you would still owe if you sold the car or paid the loan off after two years.
The formula
- P
- Amount financed in dollars, after any down payment or trade-in
- r
- Periodic rate: the annual interest rate divided by 12, written as a decimal
- n
- Number of monthly installments, the term in years times 12 rounded to a whole month
Installment loans charge simple interest on the declining balance. Each month the lender works out interest on what you still owe, and the rest of the fixed installment pays down principal. The installment formula is the payment that makes this process land on exactly zero after n months, which is why it is called a fully amortizing payment.
Stretching a loan from 36 to 60 or 72 months lowers the installment but raises total interest, because the balance stays higher for longer. For 0% promotional deals the formula would divide zero by zero, so the tool simply splits the amount into equal parts.
Worked example
Priya is offered a $12,000 personal loan at 9.5% to replace a credit card balance, and she must choose between a 3-year and a 4-year term.
- 1 Monthly rate: 0.095 ÷ 12 = 0.0079167. Number of installments: 3 × 12 = 36.
- 2 Growth factor: (1.0079167)³⁶ = 1.32827.
- 3 Installment: 12,000 × 0.0079167 × 1.32827 ÷ 0.32827 = $384.40.
- 4 Total repaid: 384.40 × 36 = $13,838.23 (using the unrounded installment), so interest is $1,838.23.
- 5 First month: 12,000 × 0.0079167 = $95.00 goes to interest and $289.40 reduces the balance.
- 6 The 4-year version costs $301.48 a month but $2,470.93 in total interest.
Result: On the 3-year term Priya pays $384.40 a month and $1,838 in interest. Taking 4 years would free up about $83 a month but cost about $633 more in interest.
Before you rely on the result
- Assumes a fixed rate, equal monthly installments and on-time payments. Variable-rate loans, interest-only periods, balloon payments and late fees are not modelled.
- Federal student loans on income-driven repayment plans do not follow this formula; use the official Loan Simulator at StudentAid.gov instead.
- Results are estimates for comparison. The binding figures are in the lender’s Truth in Lending disclosure.
Frequently asked questions
Should I enter the APR or the interest rate from my loan offer?
Enter the interest rate (sometimes called the note rate or contract rate) if you want the exact installment. Under the US Truth in Lending Act lenders must also disclose the APR, which spreads origination fees across the term; entering the APR gives a slightly higher figure that approximates the all-in cost but will not match the lender’s payment.
Does paying a car loan off early save money?
For a standard simple-interest auto loan, yes: interest accrues only on the outstanding balance, so a lump sum cuts every later interest charge. A minority of loans use precomputed interest or carry a prepayment fee, so read the contract or ask the lender before sending extra money.
Is a 72-month auto loan a bad idea?
It is not automatically bad, but it costs more in interest and cars lose value quickly, so on a long loan you can owe more than the car is worth for several years. That matters if the car is totaled or you want to trade it in early.
Why does the dealer’s quote not match this result?
Dealers often roll taxes, title, registration, extended warranties or gap insurance into the amount financed, and some quote payments with a first payment due 45 days out. Ask for the itemized amount financed and enter that figure here.
Sources
- Consumer Financial Protection Bureau: Auto loans (consumerfinance.gov)
- Federal Student Aid: Loan Simulator (studentaid.gov)