calculate-loan

01 Loan payments

Loan Payoff Schedule Calculator and Explanation

Calculator No. 01-6687 · Updated · Formula and assumptions shown below

Monthly payment $405.53
Total interest
$4,331.80
= Monthly payment × loan term × 12 − loan amount
Loan amount
$20,000
Input
Interest rate (APR)
8 %
Input
You enter
Loan amount ($), Interest rate (APR) (%), Loan term (years)
You get
Monthly payment ($), Total interest ($)
Rounding
2 dp

Estimate for education, not financial advice. The result follows from the numbers you enter and the formula shown. It is not a quote or an offer, and it does not include fees, taxes or insurance unless the calculator asks for them. Ask your lender for the exact figures.

Create a loan payoff schedule by entering the loan balance, annual percentage rate (APR), and term. This calculator estimates the monthly payment and total interest for equal monthly payments; a full dated schedule requires a payment-by-payment balance calculation.

Formula

The calculator uses the standard fixed-payment amortization formula. It first converts the annual APR to a monthly rate, then calculates the level payment that repays principal and interest over the term:

r = apr / 1200
n = yrs × 12
pmt = round(p × r / (1 − (1 + r)−n), 2)
total interest = pmt × n − p

  • p is the starting loan principal, in dollars.
  • apr is the annual percentage rate entered as a percentage, such as 8 for 8% per year.
  • r is the monthly interest rate as a decimal.
  • yrs is the term in years; n is the resulting number of monthly payments.
  • pmt is the estimated monthly payment, rounded to cents.

The total-interest result uses that rounded payment multiplied by the number of months, then subtracts the starting principal. It is an estimate for the stated term and payment pattern, not a lender-issued payoff quote.

Worked Example

Using the default inputs—$20,000 principal, 8% APR, and 5 years—the monthly rate is 0.08 / 12 = 0.0066667, and the term is 5 × 12 = 60 payments.

pmt = round(20000 × 0.0066667 / (1 − (1.0066667)−60), 2)

The formula gives a monthly payment of $405.53. Using the rounded payment, estimated total payments are 60 × $405.53 = $24,331.80. Subtracting the $20,000 starting principal gives estimated total interest of $4,331.80.

Assumptions

  • The rate remains fixed for the entire term.
  • Payments are equal monthly payments, made at the end of each monthly period.
  • Interest compounds monthly at APR divided by 12.
  • The calculation excludes fees, taxes, insurance, PMI, escrow, late charges, and any other amounts not entered.

What a Payoff Schedule Shows

A payoff schedule, often called an amortization schedule, lays out what happens at each payment date. A typical row lists the opening balance, payment, interest portion, principal portion, and closing balance. Early in a level-payment loan, interest is calculated on a larger balance, so a bigger share of the payment goes to interest. As principal declines, the interest portion generally falls and the principal portion rises.

For a more detailed schedule, calculate each month in order. With monthly rate r and opening balance B, monthly interest is B × r; principal paid is the payment minus that interest; and closing balance is the opening balance minus principal paid. Repeat using the new balance. Real statements may differ because of payment dates, daily interest calculations, rounding rules, fees, or payment changes. This calculator summarizes the level-payment formula rather than displaying all monthly rows.

How to Use and Read the Estimate

  1. Enter the amount borrowed, not the total of all future payments. If the current balance differs from the original loan amount, use the balance and remaining term only when applying the calculation to the remaining repayment period.
  2. Enter APR as a percentage number: enter 8 for 8%, not 0.08. Use the rate and term supplied for the specific loan scenario; defaults are examples, not market quotes.
  3. Read the monthly payment as an estimated scheduled amount under the formula assumptions. Read total interest as an estimate over the full term if every payment is made as modelled.
  4. For an exact amount to pay off on a particular date, request a payoff quote from the loan servicer. A quote may account for accrued interest through that date and other account-specific amounts.

A payoff schedule is not the same as a payoff quote. The schedule forecasts installments under stated assumptions; a quote states the amount due to close a particular account as of a specified date. Nor does the payment necessarily equal a complete monthly housing or vehicle cost: insurance, taxes, escrow, and other charges are outside this loan-payment calculation.

Common Sources of Differences

  • Rounding: The formula rounds the regular payment to cents. A lender may round each period’s interest differently, creating small differences in the final balance or total interest.
  • Variable rates: If the rate changes, a fixed-rate schedule will not describe future payments accurately. Recalculate using the applicable rate and remaining balance when appropriate.
  • Extra or missed payments: Additional principal payments can reduce later interest and shorten repayment, while missed or late payments can change the balance or add charges. Neither situation is represented here.
  • Payment frequency and dates: This calculation assumes monthly periods and end-of-period payments. Biweekly, irregular, or date-specific payments may use different interest timing.
  • Fees and bundled costs: APR treatment and account charges can vary. The calculator does not separately model fees, insurance, taxes, or escrow; use the loan documents for the applicable figures.

Frequently Asked Questions

Can this calculator create a month-by-month payoff schedule?
It calculates the regular monthly payment and estimated total interest, but does not output individual monthly rows. A full schedule needs the opening balance and interest/principal split recalculated for every payment period.

How do I calculate the interest portion of a payment?
For this monthly model, multiply the opening balance for that month by APR divided by 12 (with the APR converted to a decimal). Subtract that interest from the payment to estimate the principal portion.

Does paying extra change the schedule?
Yes. If an extra amount is applied to principal, the balance can fall faster and subsequent interest can be lower. The calculator assumes the same scheduled payment and no extra payments, so it does not estimate that effect.

Why does my lender’s payoff amount differ from the remaining balance?
A payoff amount can include interest accrued since the last payment and account-specific charges or credits. The displayed principal balance is not necessarily the amount needed to settle the loan on a particular date.

Can I use this for a variable-rate loan?
Only as a simplified estimate for a period when a particular rate is assumed to stay fixed. If the rate changes, the payment or repayment timeline may change too; the lender’s terms determine how that is handled.

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

Related

Formula used
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

Each line is one input (in, sel, list) or one result (out: label, unit, formula, decimals). How the calculators work

Method: the standard loan formula for this calculation, fixed rate and monthly compounding unless stated, rounded as each result states. Not financial advice; no lender, rate or product is recommended. See formulas and assumptions, the disclaimer or report an error.

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