Quick answer: A loan amortization schedule splits every payment into interest on the remaining balance plus principal repayment. Early payments are mostly interest; later ones mostly principal. Compare loans by APR, which folds fees into the rate, and remember extra payments go straight to principal, cutting total interest substantially.
Last reviewed: September 2026
Loan Calculator
Key facts
- Monthly payment = P × r(1+r)n ÷ [(1+r)n − 1] — the standard amortising-loan formula.
- A $10,000 loan at 8% for 3 years costs $313.36/month and $1,281 in total interest.
- Shorter terms mean higher payments but much less interest overall.
- APR folds in most lender fees, so it is the truest number for comparing loan offers — but the monthly payment itself is calculated from the loan's contract interest rate, not the APR.
A loan payment is the fixed monthly amount that repays what you borrowed plus interest. This free loan calculator works for personal loans, car loans, and any fixed-rate loan — it shows your monthly payment, total interest, and total cost instantly.
Enter the loan amount, annual interest rate, and term. The full amortisation summary appears at once, so you can compare offers before you sign.
How to use
- Enter the loan amount you want to borrow.
- Enter the annual interest rate (APR).
- Enter the loan term in years or months.
- Your monthly payment, total interest, and total cost appear instantly.
Loan payment formula
| Term | Meaning |
|---|---|
| M | Fixed monthly payment. |
| P | Principal — the amount borrowed. |
| r | Monthly interest rate (annual contract interest rate ÷ 12 — not the fee-loaded APR). |
| n | Total number of monthly payments. |
Example: $10,000 at 8% APR for 3 years → r = 0.006667, n = 36, so M = $313.36/month.
Worked examples
Personal loan
$10,000 at 8% for 3 years: monthly payment = $313.36. Total interest = $1,281.09; total repaid = $11,281.09.
Car loan
$5,000 at 12% for 2 years: monthly payment = $235.37. Total interest = $648.82; total repaid = $5,648.82.
Total interest on a $10,000 loan
| APR | 2 years | 3 years | 5 years |
|---|---|---|---|
| 5% | $529 | $790 | $1,323 |
| 8% | $855 | $1,281 | $2,166 |
| 12% | $1,298 | $1,957 | $3,347 |
| 18% | $1,982 | $3,015 | $5,236 |
Longer terms and higher rates both inflate the interest bill — at 18% over 5 years you pay back over half as much again in interest.
Frequently asked questions
What is the difference between interest rate and APR?
The interest rate is the cost of borrowing alone. APR adds lender fees and charges, expressed as a yearly rate — so APR is the fairer number when comparing loans.
Should I choose a shorter or longer term?
Shorter terms cost less interest but demand higher monthly payments. Longer terms are easier monthly but you pay more in total. Pick the shortest term whose payment fits your budget.
Can I pay a loan off early?
Usually yes, but check for early-repayment penalties first. Extra payments go straight to principal and cut future interest.
Does this work for mortgages?
The maths is identical — but try the dedicated Mortgage Calculator for down payments and home-loan specifics.
Why is my first payment mostly interest?
Amortisation front-loads interest: each payment first covers that month’s interest, and the rest reduces principal. As the balance shrinks, more of each payment attacks the principal.
Sources
- Bankrate — Loan amortization explained
- Federal Reserve — Consumer credit guidance
Key takeaways
- Monthly payment = P × r(1+r)n ÷ [(1+r)n − 1]; compare loans by APR, not headline rate.
- Shorter terms save interest; longer terms ease the monthly budget.
- Extra or early payments cut principal directly and reduce total interest.
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