Loan Calculator

How to use this loan calculator

Enter how much you want to borrow, the annual interest rate your lender quoted, and how many years you have to repay. The calculator instantly shows your fixed monthly payment, the total interest you will pay over the life of the loan, and the total amount you will repay overall. Drag the sliders or type exact figures to compare offers — a lower rate or a shorter term can dramatically change what the loan actually costs you.

How this is calculated

This uses the standard amortizing-loan formula. We convert your annual rate to a monthly rate by dividing by twelve, and your term to a number of monthly payments by multiplying the years by twelve. The monthly payment is then set so that paying it every month for the full term pays the loan down to exactly zero — early payments are mostly interest, and later ones are mostly principal. In words: payment = amount × monthly-rate ÷ (1 − (1 + monthly-rate) raised to the power of minus the number of payments). If the rate is zero, the payment is simply the amount divided by the number of payments. Multiply the payment by the number of payments to get the total paid, and subtract the original amount to find total interest.

Educational estimate, not financial advice — see our disclaimer.

A worked example

Say you borrow $20,000 at 7% over 5 years. The monthly rate is 7% ÷ 12 ≈ 0.583%, and there are 60 monthly payments. Plugging those into the formula gives a payment of about $396 a month. Over the full 60 months you repay roughly $23,760, which means around $3,760 of that is interest. That interest is the price of borrowing — and it is exactly the figure worth shrinking when you shop around or pay extra.

Tips to pay less interest

• Shorten the term — a 3-year loan costs far less interest than a 6-year one for the same amount, even though each monthly payment is higher.
• Chase a lower rate — even a single percentage point compounds across every month of the loan. Compare several lenders before signing.
• Pay extra when you can — additional principal payments go straight to the balance and remove future interest. Check the loan allows overpayments without penalty.
• Improve your credit first — a stronger credit score usually unlocks a better rate, which is the biggest single lever on total cost.
• Avoid stretching the term just to lower the monthly figure — it feels cheaper each month but often costs much more overall.

What affects your monthly payment

Three things move your payment: the amount borrowed, the interest rate, and the term. A bigger loan or a higher rate raises the payment; a longer term lowers the monthly figure but increases the total interest because you are borrowing for longer. The sweet spot is the shortest term whose monthly payment still fits comfortably in your budget. To see how splitting a payment into principal and interest changes month by month, try our amortization calculator. If you are sizing up a personal loan specifically, the personal loan calculator walks through typical rates and terms.