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A loan calculator answers the question that decides whether you can afford to borrow: what's the monthly payment, and how much will the loan cost in total? By spreading the amount plus interest evenly across the term, it turns a big number and a rate into a clear monthly figure — and reveals how much of your money goes to interest versus paying down the balance.
Enter the loan amount, the term in months and the monthly interest rate, and the monthly payment, total cost and full repayment schedule appear at once.
How is it calculated?
The calculation
Loans use an amortization formula that keeps every monthly payment equal:
payment = P × i × (1 + i)ⁿ ÷ ((1 + i)ⁿ − 1)
where P is the amount, i the monthly rate and n the number of months. Each payment covers that month's interest first; the rest reduces the balance. Early on, most of the payment is interest; later, most goes to principal.
Monthly vs annual rate
This calculator takes the monthly rate. If you have an annual nominal rate, divide by 12 (an 18% annual rate is 1.5% monthly). Note that the true annualized cost (APR/effective rate) is higher than 12× the monthly rate because of compounding — the tool shows the effective annual cost rate alongside the payment.
What the schedule shows
The amortization table lists, for each month: the payment, how much is interest, how much reduces the principal, and the remaining balance. Watching the interest portion shrink month by month shows exactly how the debt is retired — and why paying extra early saves the most interest.
Where it helps
- Sizing a personal, auto or home loan against your budget
- Seeing the total interest a loan will cost over its life
- Comparing two offers (a lower rate vs a shorter term)
- Understanding how much of each payment actually reduces the debt
Worked example
Borrow 100,000 over 36 months at a 1.5% monthly rate. The amortization formula gives a monthly payment of about 3,615.24. Over 36 months you repay roughly 130,148 in total, of which about 30,148 is interest — nearly a third of the original amount, purely for spreading it over three years. The schedule shows the split shifting: in month 1 about 1,500 of the payment is interest and 2,115 is principal, but by the final months almost the whole payment reduces the balance. That's why overpaying in the early months, when interest dominates, cuts the total cost the most.
FAQ
How is a monthly loan payment calculated?+
With the amortization formula: payment = P × i × (1+i)ⁿ ÷ ((1+i)ⁿ − 1), where P is the amount, i the monthly rate and n the months. It keeps every payment equal. For 100,000 over 36 months at 1.5%/month, that's about 3,615.
How do I convert an annual rate to a monthly one?+
Divide the annual nominal rate by 12: 18% per year is 1.5% per month. The tool takes the monthly rate and also shows the effective annual cost, which is a little higher due to compounding.
Why is most of my early payment interest?+
Each payment covers that month's interest on the outstanding balance first; the rest reduces the principal. Early on the balance is largest, so interest dominates — the split reverses over time.
What is an amortization schedule?+
A month-by-month table showing each payment split into interest and principal, plus the remaining balance. It reveals exactly how the loan is paid off and how much interest it costs in total.
Does paying extra early save money?+
Yes — a lot. Extra payments in the early months, when interest is the biggest part of each installment, reduce the balance that all future interest is charged on, cutting the total cost significantly.
How much will the loan cost in total?+
Total cost is the monthly payment × number of months; the difference from the amount borrowed is the total interest. The tool shows both, so you see the full price of borrowing before you commit.