Calculated using standard mathematical and industry formulas.
Calculate monthly loan payments using the fixed amortization formula M = P × [ r(1+r)^n ] / [ (1+r)^n - 1 ]. A $20,000 loan at 6% annual interest over 5 years results in $386.66 monthly payments, totaling $23,199 ($3,199 in total interest fees).
How to use this calculator?
Enter the amount you want to borrow — the principal, before any interest.
Set the annual interest rate from your loan offer. To compare offers fairly, use the APR, which includes fees.
Choose the term in years. Most car loans run 3–7 years, personal loans 1–5.
Read the monthly payment, total interest and total repaid in the result panel — they update live.
Scroll down for the yearly payoff schedule, and use Share to compare scenarios with someone else.
Formula & calculation method
How the fixed monthly payment is calculated
Monthly Payment M = P × [ r(1 + r)^n ] / [ (1 + r)^n - 1 ]; Total Loan Cost = (M × n) - P; where P = Principal loan amount, r = Monthly interest rate (Annual rate / 12), n = Total months
M = monthly payment · P = amount borrowed · r = monthly rate (annual ÷ 12) · n = number of payments (years × 12). Each payment covers that month's interest first; the remainder reduces the balance.
Step-by-step calculation example
A $20,000 loan at 7.5% over 5 years: r = 0.00625, n = 60 → monthly payment ≈ $400.76 and about $4,045 of total interest.
Key insights to remember
On a 5-year loan at 7.5%, total interest is about 20% of the amount borrowed; stretching the same loan to 10 years roughly doubles that share.
Interest is charged on the remaining balance, so early payments are interest-heavy and the balance falls slowly at first.
A rate drop from 7.5% to 6% on a $20,000, 5-year loan saves roughly $850 in total interest.
Extra principal payments shorten the term and cut total interest — there is no way to 'prepay' interest.
Shorter terms almost always cost less overall, even when the higher monthly payment feels steep.
How to interpret your results?
Principal vs. Interest Amortization
During early repayment years, the majority of each installment goes toward interest fees. Principal reduction accelerates over time as remaining loan balance declines.
Expert advice & guidance
💡 Borrowing tip: Making small extra principal payments each month reduces overall interest expense substantially and shortens your repayment timeline by years.
Frequently asked questions
How can you reduce your total loan cost?
Reduce total loan cost by making larger down payments, choosing shorter repayment terms, securing lower interest rates, or making extra principal payments.
Is debt consolidation a good idea to lower interest rates?
Debt consolidation can lower total interest if the new consolidated loan offers a significantly lower APR than existing credit cards or personal loans.
Can you refinance a personal loan or car loan?
Yes, refinancing replaces an existing loan with a new loan at a lower interest rate or different term to reduce monthly payments.
What is the difference between nominal interest rate and APR?
Nominal rate is the basic interest charge; APR (Annual Percentage Rate) includes interest plus upfront lender fees and closing costs.
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