Loan Payment Calculator — Monthly Payment for Any Loan

M = P × [r(1+r)^n] / [(1+r)^n − 1]

M = monthly payment · P = principal
r = monthly rate (annual rate / 12)
n = number of monthly payments

This is the standard amortizing loan formula. Early payments are mostly interest; later payments shift toward principal. Total interest = (M × n) minus the original loan amount.

Monthly payment (P=A1, rate%=B1, months=C1)

=PMT(B1/100/12,C1,-A1)

Total interest paid

=PMT(B1/100/12,C1,-A1)*C1-A1

Loan Payment Formula ExplainedSearch YouTube tutorials →

How Amortization Works

When you take out an amortizing loan, each monthly payment covers two things: the interest that has accrued since your last payment, and a portion of the remaining principal balance. The split between these two changes every month. In the early months of a loan, the vast majority of each payment goes to interest. As the balance shrinks, progressively more goes to principal.

On a 5-year $25,000 auto loan at 6.5%, your first payment of about $487 might apply $135 to principal and $352 to interest. By the final year, that same $487 payment applies $480 to principal and only $7 to interest. The total payment never changes; what changes is how it is allocated.

This front-loading of interest is why extra payments are most valuable early in a loan. Each extra dollar of principal reduction in year one saves more total interest than the same dollar paid in year four, because earlier reductions eliminate more future interest accrual.

Interest Rate vs APR

Interest rate and APR (Annual Percentage Rate) are related but different. The interest rate is the cost of borrowing expressed as a percentage of the principal. APR includes the interest rate plus other loan costs — origination fees, points, broker fees — spread over the loan term.

APR gives a more complete picture of the true cost of borrowing. When comparing loans, always compare APRs rather than interest rates alone. A loan with a lower interest rate but high fees may have a higher APR — and therefore higher total cost — than one with a slightly higher rate and no fees.

This calculator uses the stated interest rate only. To account for fees, add them to the loan amount or use the APR instead of the interest rate for a more conservative estimate of total cost.

Frequently Asked Questions

Most lenders have a grace period of 10-15 days before charging a late fee. Payments more than 30 days late are typically reported to credit bureaus and can significantly damage your credit score. Contact your lender immediately if you know you'll miss a payment — most have hardship programs that can defer a payment or temporarily reduce the required amount.

Shorter terms have higher monthly payments but significantly lower total interest cost. A $25,000 loan at 6.5%: 3-year term costs $764/month with $2,480 total interest. 6-year term costs $422/month but $5,376 total interest — more than double the interest cost. If cash flow allows, shorter terms are almost always the better financial choice.

Fixed rate: interest rate stays the same for the entire loan term — payment is predictable. Variable rate: interest rate changes periodically based on a market index — payment can go up or down. Fixed rates offer certainty; variable rates often start lower but carry risk of increases. For most consumer loans, fixed rates are recommended.

Extra principal payments directly reduce your balance, which reduces future interest accrual and shortens the loan term. Even $50-100 extra per month can cut years off a long-term loan and save thousands in interest. Always confirm with your lender that extra payments are applied to principal, not treated as early payment of future scheduled payments.