Frequently asked questions

How is a monthly loan payment calculated?

A fixed monthly payment comes from three inputs: the loan amount, the interest rate, and the number of payments. They are combined with the standard amortization formula to produce one level payment that clears the loan exactly at the end of the term. Each payment covers that month's interest first, and the rest reduces the balance.

What is amortization?

Amortization is the process of paying off a loan in equal payments over time. The payment stays the same, but its makeup shifts: early payments are mostly interest because the balance is large, and later payments are mostly principal as the balance shrinks. The calculator's amortization schedule shows the principal, interest, and remaining balance for every month.

How much interest will I pay in total?

Total interest is the sum of the interest portion of every payment across the life of the loan, and it depends on the amount, the rate, and the term. As a plain example, a $25,000 loan at 6.5% over 5 years costs about $4,350 in total interest. Enter your own figures and the calculator shows the exact total interest and total paid.

Why are my early payments mostly interest?

Interest each month is charged on your current balance, which is highest at the start of the loan. So early on, a large share of your fixed payment goes to interest and only a little to principal. As the balance falls, the interest portion shrinks and more of each payment reduces what you owe.

Do extra payments really help?

Yes. Any amount you pay above the required payment goes straight to the principal, which lowers the balance that interest is charged on. That shortens the loan and cuts the total interest you pay. The calculator's extra-payment field shows exactly how much time and interest a given extra amount saves.

What is the difference between APR and interest rate?

The interest rate is the cost of borrowing the principal, expressed as a yearly percentage. The APR, or annual percentage rate, includes that interest rate plus certain lender fees, so it reflects the fuller yearly cost of the loan; when a loan has no added fees, the two are the same. This calculator treats the rate you enter as the annual rate and divides it across 12 months.

How does the loan term affect my payment?

A longer term spreads the balance over more payments, so each monthly payment is smaller. The trade-off is that you borrow for longer, which raises the total interest you pay. A shorter term does the opposite: a higher monthly payment but less total interest. You can switch the term between years and months in the calculator to compare.

What kinds of loans can I use this calculator for?

It works for any fixed-rate loan with equal monthly payments, including personal loans, auto loans, and standard student loans. For an auto loan, enter the amount financed after any down payment. It is not built for credit cards or other revolving debt, where the balance and payment change month to month.

Is this loan calculator free?

Yes, the calculator is completely free to use with no sign-up and no account. You can run as many loans as you like.

Is this calculator private?

Yes. All the math runs in your browser, and none of the numbers you enter are uploaded or stored on a server. Nothing you type leaves your device.