Interest Rate Calculator: Find a Loan’s Monthly Payment

This fixed-rate loan calculator shows the monthly payment and total interest from a loan amount, annual percentage rate (APR), and term. Enter the figures from a lender’s quote to estimate the payment and see how the interest adds up.

Formula

The calculator uses the standard fixed-payment amortization formula. It converts the annual APR to a monthly rate, calculates a level monthly payment over the full term, rounds that payment to cents, and then subtracts the amount borrowed from all scheduled payments to estimate total interest.

Monthly payment: M = P × r / [1 − (1 + r)⁻ⁿ]

Total interest: I = M × n − P

• P is the loan principal, in dollars.
• APR is the annual percentage rate, entered as a percent per year.
• r is the monthly rate as a decimal: APR ÷ 1200.
• n is the number of monthly payments: loan term in years × 12.
• M is the monthly payment, in dollars, rounded to the nearest cent.
• I is total interest over the scheduled term, in dollars.

The payment formula assumes that each payment is the same and is made monthly. The total-interest result uses the displayed, cent-rounded payment multiplied by the number of payments, then subtracts principal. A lender’s final payment can differ slightly because of its precise rounding and payment schedule.

Worked Example

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

1. Convert the APR to a monthly decimal rate: r = 8 ÷ 1200 = 0.0066667.
2. Convert the term to payments: n = 5 × 12 = 60.
3. Substitute into the payment formula: M = 20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰].
4. The unrounded payment is about $405.53, so the monthly payment rounded to cents is $405.53.
5. Total scheduled payments are $405.53 × 60 = $24,331.80; subtract $20,000 principal to get estimated total interest of $4,331.80.

Assumptions

• The interest rate stays fixed for the entire term.
• Payments are made monthly, at the end of each payment period.
• Interest accrues monthly using APR divided by 12.
• The estimate excludes fees, taxes, insurance, PMI, escrow, and any charges not represented by the inputs.

What an Interest Rate Means

An interest rate is the cost of borrowing expressed as a proportion of the amount owed over a stated period. A quoted annual rate is not the same thing as the monthly rate used in the formula: for this estimate, an 8% APR becomes 8% ÷ 12, or about 0.667% per month. The calculator uses APR because it is the annual rate input; the exact meaning and included charges in a lender’s quote depend on that lender’s disclosure.

Interest is generally charged on the outstanding balance, not repeatedly on the original principal alone. In an amortizing loan, early payments therefore tend to contain a larger interest portion, while later payments put more toward reducing principal. The payment can remain level even as its interest and principal portions change.

How to Use and Read the Estimate

Enter the amount borrowed, the annual APR as a percentage (for example, enter 8 for 8%), and the repayment term in years. The first result is the estimated monthly payment; the second is the interest implied by making that rounded payment for every scheduled month.

For instance, changing only the term changes how many payments are included and how long interest can accrue. A longer term can produce a lower scheduled monthly payment while increasing total interest, all else equal. A shorter term generally means fewer payments, but a higher monthly payment. This is a mathematical comparison, not a prediction of what a lender will offer.

Use the APR and term stated in the specific quote you are examining. If a quote has an introductory rate, a variable rate, a fee-financed balance, or a balloon payment, this fixed-rate level-payment formula does not reproduce those terms. The calculator also does not determine eligibility, approval, or a personalized borrowing amount.

Common Mistakes and Limits

• Entering a percent as a decimal: Type 8 for 8%, not 0.08. The formula converts the percentage to a monthly decimal.
• Mixing up rate and APR: Enter an annual percentage value, not a monthly rate. Using a monthly rate as APR makes the estimate far too small.
• Assuming the payment includes every cost: The result covers principal and modeled interest only. Separate lender charges and property or insurance costs are not included.
• Ignoring rounding: The payment is rounded to cents before total interest is calculated. Actual servicing calculations may use more precise daily accrual or adjust the final payment.
• Applying it to a changing balance or rate: The formula is for a fixed rate and equal monthly payments. It is not designed for irregular payments, interest-only periods, adjustable rates, or fees added during repayment.

A useful check is to compare the calculator’s payment with the payment figure in a written quote using the same principal, rate, term, and payment frequency. Differences can signal a different APR definition, financed fees, timing, or repayment structure; the calculator alone cannot identify which applies.

Frequently Asked Questions

What is the interest rate right now?
There is no single interest rate that applies to every borrower or loan. Rates vary by loan type, lender, application, and date; use the APR from the quote you are evaluating rather than treating this calculator’s example rate as a current offer.

How do I calculate interest on a loan?
For a fixed-rate loan with equal monthly payments, first calculate the payment using principal, monthly rate, and number of payments. Multiply the cent-rounded payment by the number of payments, then subtract principal to estimate total interest.

Is APR the same as an interest rate?
Not always. APR is an annualized rate used in loan disclosures and may account for certain borrowing costs, while a nominal interest rate describes the rate charged on the balance. What is included can depend on the product and disclosure, so compare the stated terms carefully.

Does a lower monthly payment mean less interest?
No. A lower payment can result from extending the repayment term, which may mean more scheduled payments and higher total interest. Compare both payment and total cost using matching loan terms.

Does this calculator show my actual lender payment?
No. It is a mathematical estimate based on the inputs and assumptions listed above. Fees, payment dates, rate changes, and lender rounding can affect the actual figures.

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

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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