calculate-loan

01 Loan payments

Loan Repayment Calculator: Monthly Payment and Interest

Calculator No. 01-6536 · 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.

This loan repayment calculator estimates your fixed monthly payment and total interest from the amount borrowed, annual APR, and repayment term. Enter those three figures to see the payment and the interest paid across the scheduled term.

Formula

The calculator uses the standard fixed-payment amortization formula. It first finds the monthly payment, rounds it to the nearest cent, then calculates total interest using that rounded payment:

  • Monthly payment: M = round[P × r ÷ (1 − (1 + r)−n), 2]
  • Total interest: I = M × n − P
  • Monthly rate: r = APR ÷ 1,200
  • Number of payments: n = term in years × 12

P is the principal, or starting loan amount, in dollars; APR is the annual percentage rate entered as a percentage; r is the monthly interest rate as a decimal; n is the number of monthly payments; M is the monthly payment in dollars; and I is total interest in dollars. The formula assumes equal monthly payments and a fixed rate. The APR input must be above zero for this formula. A zero-interest loan would instead have a payment of P ÷ n.

Worked Example

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

  1. Convert APR to a monthly decimal rate: r = 8 ÷ 1,200 = 0.0066667.
  2. Convert the term to payments: n = 5 × 12 = 60.
  3. Substitute into the payment formula: M = round[$20,000 × 0.0066667 ÷ (1 − (1.0066667)−60), 2] = $405.53 per month.
  4. Calculate total payments using the displayed, rounded payment: $405.53 × 60 = $24,331.80.
  5. Subtract the original principal: $24,331.80 − $20,000 = $4,331.80 total interest.

Figures may differ slightly from a lender’s schedule if its payment dates, rounding method, or other loan terms differ.

Assumptions

  • The interest rate stays fixed for the full term.
  • Payments are equal, made monthly, and begin on the assumed schedule.
  • Interest is calculated monthly using APR divided by 12.
  • The estimate does not include fees, taxes, insurance, PMI, escrow, or other charges because the calculator has no inputs for them.

What Loan Repayment Means

Loan repayment is the process of returning borrowed principal and paying the interest charged under the loan agreement. For a typical fully amortizing installment loan, each scheduled payment covers interest accrued for that period and reduces principal. Early in the schedule, a larger share of each payment generally goes to interest; as the balance falls, more goes to principal. The exact allocation depends on the rate, balance, payment timing, and contract terms.

This page estimates the scheduled payment for a level-payment loan. It does not determine whether a lender will approve an application, set an offered rate, or show every amount due at signing. Use the lender’s written terms for those details.

How to Use and Read the Estimate

Enter the amount being financed, not necessarily the purchase price. If a down payment or other amount reduces the sum borrowed, use the resulting principal. Enter APR as a percentage: type 8 for 8%, not 0.08. Enter the full repayment period in years; for example, enter 3 for a 36-month term.

  • Monthly payment is the estimated recurring principal-and-interest payment under the model.
  • Total interest is the interest implied by that rounded payment over all scheduled months.
  • Total paid is not displayed separately, but equals the principal plus the displayed total interest under these assumptions.

Compare estimates only when the loan amount, rate basis, term, and included charges are understood. A longer term usually spreads repayment across more payments; the formula also shows how the payment and total interest respond to the inputs. It does not decide which structure is suitable for an individual situation.

Common Questions About Repayment

Does the monthly payment include every loan cost?
No. The result covers modeled principal and interest only. Fees, insurance, taxes, escrow, and other charges are excluded unless included in the amount borrowed or represented in a separate lender calculation.

Is APR the same as the monthly interest rate?
No. APR is entered here as a yearly percentage. The formula converts it to a monthly rate by dividing by 12 and converting from percent to decimal. A lender may disclose additional details about how its APR is calculated.

Why does the lender’s payment differ from this estimate?
Possible reasons include fees financed into the balance, a variable rate, a different payment date or day-count method, rounding, an irregular first period, or added products and charges. Check the lender’s payment schedule and disclosure to identify what is included.

Can I use this for an interest-only or variable-rate loan?
This formula is for a fixed-rate loan with equal payments that amortize principal and interest. It does not model interest-only periods, changing rates, balloon payments, or irregular payment schedules.

Does an extra payment reduce the interest shown?
Extra principal payments can change a real loan’s balance and repayment schedule, but this calculator assumes only the regular fixed payment. It does not calculate the effect of extra payments or any conditions that may apply to them.

Limits and Practical Checks

Before relying on a repayment figure, confirm the exact principal, APR, term, payment frequency, and whether the rate can change. Ask the lender for its full payment schedule and identify any charges or financed costs that are outside this estimate. If you make additional payments or miss a payment, the actual balance and payoff date can diverge from the modeled schedule.

Calculations are rounded to cents for the monthly payment, so multiplying that rounded amount by the number of months is the basis for the displayed total interest. Actual schedules may use different rounding conventions. This result is an estimate; 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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