Calculate Loan Repayment: Monthly Payment and Interest

Calculate an estimated fixed monthly loan payment and total interest by entering the amount borrowed, annual percentage rate (APR), and term in years. The calculator uses a standard level-payment formula and returns the monthly payment first, followed by the total interest paid over the full term.

Formula

The calculator uses the standard fixed-payment amortization formula. It calculates the monthly payment from the principal, monthly interest rate, and number of monthly payments:

Payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

• P is the loan principal, or amount borrowed, in dollars.
• r is the monthly interest rate as a decimal: APR ÷ 12 ÷ 100.
• n is the number of monthly payments: loan term in years × 12.

Total interest is calculated as the rounded monthly payment multiplied by the number of payments, minus the original principal: Total interest = monthly payment × n − P. The calculator rounds the payment to the nearest cent before calculating interest, so its total reflects a schedule of equal cent-rounded payments.

Worked Example

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

1. Convert APR to a monthly decimal rate: 8 ÷ 1200 = 0.0066667.
2. Find the number of monthly payments: 5 × 12 = 60.
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.

The estimated monthly payment is $405.53, and estimated total interest is $4,331.80.

Assumptions

• The interest rate remains fixed for the full term.
• Payments are made monthly, with the first payment one month after borrowing.
• Interest is compounded monthly at APR ÷ 12.
• The calculation excludes fees, taxes, insurance, PMI, and escrow, as well as any charges or payment changes not entered here.

When to Use a Loan Repayment Estimate

This estimate is useful for understanding the scheduled principal-and-interest payment on a loan with equal monthly installments. It can help you compare what different entered amounts, APRs, or terms produce mathematically. It does not determine whether a lender will approve an application or whether a payment fits a particular budget.

Use the amount actually being financed as the principal. For a purchase, that might differ from the item’s price if a down payment, trade-in, financed fee, or other amount changes how much is borrowed. Enter the APR as a percentage per year—not as a monthly percentage—and enter the term in years. The calculator converts those values to monthly units internally.

How to Read the Results

The monthly payment is the formula’s scheduled level payment toward principal and interest. Early in a typical amortizing schedule, more of each payment goes toward interest because the outstanding balance is larger. As the balance falls, the interest portion generally decreases and more of the payment reduces principal. The total-interest output is the sum implied by the rounded payment over all scheduled months, less the original amount borrowed.

A longer term usually means more scheduled payments; with the same principal and rate, that generally lowers the calculated monthly payment but raises total interest. A higher APR generally increases both the payment and total interest for a fixed principal and term. These are formula relationships, not a prediction of any lender’s offer. Use figures supplied for the specific loan when available.

Common Calculation Limits and Mistakes

• Confusing APR and monthly rate: An APR of 8% is entered as 8, not 0.08. The formula divides by 1,200 to obtain the monthly decimal rate.
• Mixing years and months: The term field is in years. A five-year term means 60 monthly payments.
• Assuming the payment includes every cost: This estimate covers principal and interest only. A billed amount may also include fees, taxes, insurance, or other charges.
• Ignoring rounding: Actual statements round amounts to cents and may differ slightly because of payment dates, daily-interest methods, or a final adjusted payment. This calculator rounds the regular payment to cents and assumes it remains equal.
• Applying it to changing-rate or irregular-payment debt: A variable rate, skipped payment, extra payment, interest-only period, or balloon payment changes the schedule and is not represented by this formula.

The formula requires a positive principal, a positive APR, and a positive term. The calculator’s term limit is 50 years and its APR limit is 100%; those input limits do not imply that a particular loan is available on those terms. For a rate that changes or payments that vary, a single fixed-payment estimate cannot describe every future installment.

Frequently Asked Questions

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

Does the monthly payment include interest?
Yes. The calculated payment combines principal repayment and interest. It does not include fees, taxes, insurance, or other costs unless they are included in the principal or separately modelled.

Why does a longer loan term increase total interest?
With the same principal and APR, a longer term spreads repayment across more monthly periods. The payment may be lower, but interest accrues for longer, so the formula generally produces a larger total interest amount.

Is APR the same as the monthly interest rate?
No. APR is entered as an annual percentage. This calculator uses APR ÷ 12 ÷ 100 as its monthly decimal rate; the lender’s APR may also reflect costs or conventions that this simplified model does not separately represent.

Why might my lender’s payment differ?
The loan may include financed fees, a different principal, payment dates, a variable rate, a different interest method, or rounding and final-payment adjustments. Check the lender’s itemized payment schedule and disclosures for the figures that apply.

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

Related

• Loan Calculator With Down Payment: Payment on What You Borrow
• Loan Payment Calculator: Monthly Payment, Total Interest and Cost
• Loan Calculator Based on Payment Amount: How Long to Pay It Off

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 | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2