Loan Calculator
Work out payments, total interest, and payoff time for any fixed-rate loan.
Quick answer
A fixed-rate loan payment is calculated with the amortization formula: payment = principal × monthly rate ÷ (1 − (1 + monthly rate)^−months). Early payments are mostly interest and later ones mostly principal, so paying extra toward principal shortens the term and cuts total interest.
Monthly payment
$396.02
Total interest
$3,761
Total paid
$23,761
Paid off in
5 yr
- Principal$20,000
- Interest$3,761
How loan payments are calculated
A fixed-rate loan is repaid in equal monthly installments. Each payment first covers the interest accrued on the remaining balance that month; the rest retires principal. The payment comes from the standard amortization formula:
M = P × [ r(1 + r)n ] / [ (1 + r)n − 1 ]
where P is the amount borrowed, r the monthly rate (annual rate ÷ 12), and n the number of monthly payments. Because interest is charged on the remaining balance, early payments are mostly interest and later ones mostly principal.
Reading the results
Total interest is the real cost of borrowing — compare it, not the monthly payment, when weighing offers. A longer term lowers the monthly payment but raises the total interest. Extra monthly payments go entirely to principal, which is why even small ones shorten the loan disproportionately.
Frequently asked questions
- How does the Loan Calculator work?
- A fixed-rate loan payment is calculated with the amortization formula: payment = principal × monthly rate ÷ (1 − (1 + monthly rate)^−months). Early payments are mostly interest and later ones mostly principal, so paying extra toward principal shortens the term and cuts total interest.
- Is the Loan Calculator free to use?
- Yes. The Loan Calculator is completely free, runs entirely in your browser, and requires no account or sign-up. Your inputs never leave your device.
Sources & methodology
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