Loan Payment Calculator: Estimate Your Monthly Payment

This loan payment calculator estimates your monthly payment and total interest from the amount borrowed, annual percentage rate (APR), and term. Enter those figures to see the scheduled payment and the estimated interest over the full repayment period.

Formula

The calculator uses the standard fixed-payment amortizing-loan formula. It first calculates the monthly payment, rounded to the nearest cent:

Payment = round(P × r ÷ [1 − (1 + r)⁻ⁿ], 2)

• P is the loan amount in dollars.
• r is the monthly interest rate as a decimal, calculated as APR ÷ 1,200. For example, 8% APR gives 0.08 ÷ 12 = 0.0066667 per month.
• n is the number of monthly payments, calculated as loan term in years × 12.

Total interest is calculated using the displayed, cent-rounded monthly payment: Total interest = payment × n − P. Because a payment is rounded to cents, the result is an estimate; an actual lender may adjust the final payment to settle a small remaining balance.

Worked Example

Using the calculator’s defaults—$20,000 principal, 8% APR, and a 5-year term:

1. Convert APR to a monthly decimal rate: 8 ÷ 1,200 = 0.0066667.
2. Find the number of payments: 5 × 12 = 60 months.
3. Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰] = $405.53 per month, rounded to cents.
4. Calculate total interest using that rounded payment: $405.53 × 60 − $20,000 = $4,331.80.

So the estimate is a monthly payment of $405.53 and total interest of $4,331.80 across 60 scheduled payments.

Assumptions

• The interest rate stays fixed for the entire loan term.
• Payments are made once per month, at the end of each monthly period.
• Interest accrues monthly at APR divided by 12.
• The estimate excludes fees, taxes, insurance, PMI, escrow, and any other amounts not entered in the calculator.

When to Use a Monthly Payment Estimate

A payment estimate helps translate a proposed principal, rate, and term into a regular scheduled amount. It can also show how the term affects the arithmetic: with the same principal and rate, spreading repayment across more months generally lowers the scheduled payment but increases the number of periods in which interest accrues. A shorter term generally means fewer payments and less total interest under this formula, while the monthly amount is higher.

For instance, a $20,000 loan at 8% APR over five years produces the example payment above. If you are comparing two hypothetical offers, enter each offer’s quoted loan amount, APR, and term separately. Keep other assumptions consistent so you can see the effect of each changed input. This is a mathematical comparison, not a prediction of the final amount a lender will bill.

Reading the Results and Common Mistakes

The first result is the estimated scheduled payment for each month. The second is total interest across the full term, calculated as total scheduled payments minus the original principal. It is not the total amount paid: to estimate total payments, add the principal to the displayed interest, or multiply the displayed monthly payment by the number of months.

• Check the units: enter APR as a percentage such as 8, not as 0.08. Enter the term in years, not months.
• Use the loan principal: the amount financed may differ from a purchase price if a down payment or other financed costs are involved.
• Do not confuse APR with the monthly rate: this formula converts annual APR to a monthly rate by dividing by 12 and converting percent to decimal.
• Expect rounding differences: the calculator rounds the payment to cents, while a lender’s system may calculate with additional precision and adjust the final payment.

Limits and Other Costs

This formula describes a level-payment, fixed-rate loan that is repaid through equal monthly payments. It does not model an adjustable rate, interest-only period, balloon payment, irregular payment dates, skipped payments, prepayment penalties, or extra principal payments. If the loan has any such feature, its payment schedule can differ.

APR and loan terms are inputs, not current-market claims. Use the figures stated in the lender’s documents or obtain the relevant quoted figures directly from the lender. Depending on the product, a billed amount can also include fees or other charges that this calculator does not include. Taxes, insurance, PMI, and escrow are not part of the principal-and-interest payment shown here.

A common misconception is that a lower monthly payment necessarily means a lower borrowing cost. A longer repayment period can lower the scheduled monthly amount while increasing total interest, because interest is calculated over more months. Conversely, this calculator alone cannot tell you whether a payment fits a budget or whether an application will be approved.

Frequently Asked Questions

How do I calculate a monthly loan payment?
Convert APR to a monthly decimal rate by dividing the percentage by 1,200, convert the term to months, and use the fixed-payment formula shown above. This calculator performs those steps and rounds the payment to cents.

Does the payment include interest and principal?
Yes. In a standard amortizing loan, each scheduled payment covers interest due for the period and repays part of the principal. The interest and principal portions change over time even when the scheduled payment stays level.

Why can my lender’s payment differ?
The lender may include fees or other charges, use different timing or rounding, or calculate a final adjusted payment. The estimate also assumes a fixed rate and regular monthly payments.

Is total interest the same as the total amount repaid?
No. Total interest is the estimated cost above the original principal. Add the principal to total interest to estimate total scheduled payments under the calculator’s assumptions.

Can I use this for a variable-rate loan?
It can show a hypothetical payment using one APR, but it does not model future rate changes. Payments on a variable-rate loan may change when its rate changes.

This result is an estimate, and the lender’s disclosure gives the exact figures.

Related

• Amortization Calculator: Principal Payment Explained
• Amortization Calculator With Extra Payments
• Amortization Calculator: Find Your Monthly Payment

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | round(p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)), 2) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2