What Is My Monthly Loan Payment? Calculator & Formula

This calculator estimates a fixed-rate loan’s monthly principal-and-interest payment from the amount borrowed, annual percentage rate (APR), and term. Enter those three figures to see the monthly payment and estimated total interest over the full term.

Formula

The standard fixed-payment formula divides the loan amount multiplied by the monthly interest rate by one minus the monthly growth factor raised to the negative number of payments:

Payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

• P is the principal, or amount borrowed, in dollars.
• r is the monthly interest rate as a decimal: APR ÷ 100 ÷ 12. With APR entered as a percentage, this is APR ÷ 1,200.
• n is the total number of monthly payments: loan term in years × 12.

The calculator’s second result is estimated total interest: monthly payment × number of payments − principal. The calculator uses the unrounded payment formula for its displayed payment and calculates interest from that displayed payment, so small cent-rounding differences can occur over many payments. Lenders may adjust the final installment to clear a remaining balance.

Worked Example

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

1. Monthly rate: 8 ÷ 1,200 = 0.0066667.
2. Number of monthly payments: 5 × 12 = 60.
3. Substitute in the formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰].
4. The monthly payment is approximately $405.53.
5. Using the displayed, cent-rounded payment, estimated total paid is $405.53 × 60 = $24,331.80, and estimated total interest is $24,331.80 − $20,000 = $4,331.80.

Assumptions

• The interest rate stays fixed for the entire term.
• Payments are equal monthly payments made at the end of each monthly period.
• Interest accrues monthly at APR ÷ 12; the APR input is treated as a nominal annual rate.
• The estimate covers principal and interest only. It does not include fees, taxes, insurance, private mortgage insurance (PMI), or escrow.

How to Read Your Monthly Payment

The first result is the estimated amount due each month for principal and interest under the stated assumptions. It is not necessarily the complete amount a borrower may be billed: a mortgage payment, for example, may include separately calculated taxes, insurance, or escrow. Fees or other loan charges may also affect the amount financed or the lender’s quoted payment.

The total-interest result estimates how much interest is paid if every scheduled payment is made as modeled. Early payments on a standard amortizing loan generally include a larger interest portion; as the principal balance declines, more of each level payment goes toward principal. The monthly payment stays level in this model, but its principal-and-interest components change over time.

For example, a payment of $405.53 is not the same as paying $405.53 toward principal every month. Interest is part of that payment, calculated on the unpaid balance. Nor does the displayed amount include unrelated monthly costs simply because they appear on a bill.

When This Estimate Applies

This formula fits a fully amortizing loan with a fixed periodic rate, equal payments, and a set payment schedule. It can provide a mathematical estimate for many fixed-rate installment loans when the principal, APR, and term are known. Use the rate and term from the loan’s actual disclosure or quote; the defaults are example inputs, not a statement about available rates or terms.

The calculation is not a payment quote for a variable-rate loan, an interest-only period, a balloon loan, or a loan with irregular payment dates. Those arrangements do not follow the same fixed-payment assumptions throughout the term. If a loan includes financed charges, use the amount actually financed as the principal only if that is how the lender defines the balance used to calculate the scheduled payment.

Common Mistakes and Limits

• Entering APR as a decimal: Type 8 for 8%, not 0.08. The formula converts the percentage to a monthly decimal rate.
• Using the wrong term unit: Enter years, such as 5, rather than 60 months. The calculator multiplies years by 12.
• Confusing payment with total cost: The monthly result excludes any charges not represented by the principal, rate, and term inputs.
• Assuming the rounded result is an exact payoff schedule: Actual servicing can involve cent rounding, payment-date conventions, fees, or a final-payment adjustment.
• Using a changing rate as if it were fixed: A rate change can alter later payments or the repayment schedule, which this formula does not model.

At a fixed principal and term, a higher APR raises the calculated payment. At a fixed principal and APR, a longer term generally lowers the required monthly payment but extends the period over which interest accrues. These are effects of the formula, not a judgment about which loan structure is appropriate for an individual.

Frequently Asked Questions

How do I calculate my monthly loan payment?
Convert APR to a monthly decimal rate by dividing it by 1,200, convert the term to months, and apply P × r ÷ [1 − (1 + r)⁻ⁿ]. This calculator performs those steps for a fixed-rate loan.

Does my monthly payment include taxes and insurance?
No. This estimate includes principal and interest only. Taxes, insurance, escrow, PMI, and fees are not included because the calculator has no inputs for them.

Why is my lender’s payment different?
The lender may use a different amount financed, rate, term, payment schedule, rounding method, or additional charges. Compare the inputs and assumptions with the lender’s disclosure to identify what differs.

Does a longer loan term lower the monthly payment?
For the same principal and fixed APR, extending the term generally lowers the scheduled monthly payment, while increasing the number of payments. This calculator’s total-interest estimate reflects that longer schedule.

Can I use this for a variable-rate loan?
Only as a snapshot under a chosen rate. The result assumes that rate remains unchanged; it cannot predict payments after a rate adjustment.

Is the result the amount I will be approved to borrow?
No. It calculates a payment from the inputs you provide and does not evaluate eligibility, underwriting, or what a person can afford.

This result is an estimate, 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