Loan Calculator
Works for any fixed-rate loan — personal, auto, student, or business. Get the monthly payment, total interest, and payoff date, with the formula shown.
The loan payment formula
- P — amount borrowed · r — monthly rate (annual ÷ 12 ÷ 100) · n — number of payments
Borrow $20,000 at 8% for 5 years: r = 0.006667, n = 60
M = 20,000 × [0.006667 × 1.00666760] ÷ [1.00666760 − 1] = $405.53/mo
Total paid: $24,332 → $4,332 in interest.
Payment at different rates and terms ($20,000 loan)
| Rate | 3 years | 5 years | 7 years |
|---|---|---|---|
| 6% | $608 /mo | $387 /mo | $292 /mo |
| 8% | $627 /mo | $406 /mo | $312 /mo |
| 10% | $645 /mo | $425 /mo | $332 /mo |
| 12% | $664 /mo | $445 /mo | $353 /mo |
Notice the trade-off: stretching from 3 to 7 years cuts the payment roughly in half but more than doubles the interest paid. If an offer quotes fees on top of the rate, compare offers by APR instead — and for the month-by-month breakdown of any result here, use the amortization calculator.
Common mistakes when comparing loan offers
- Comparing rates instead of APR. Two loans with the same interest rate can have very different total costs if one carries an origination fee — always ask for the APR, which folds mandatory fees into a single comparable number.
- Choosing the term based on the payment alone. A payment that "fits" at 7 years often costs thousands more than the same loan at 3–5 years — model both before committing, using the table above.
- Not modeling extra payments before signing. Many personal and installment loans allow extra principal payments with no penalty; entering an extra monthly amount in this calculator shows exactly how much time and interest that habit would save.
- Ignoring prepayment penalties. A minority of loans charge a fee for paying off early — check your specific loan agreement before assuming you can freely accelerate payoff.
Frequently asked questions
How do I calculate a loan payment?
M = P × r(1+r)n / ((1+r)n − 1). For $20,000 at 8% over 5 years: $405.53/mo.
What's the difference between interest rate and APR?
APR includes mandatory fees, so it's the true comparison number. It's always ≥ the stated rate.
Does a longer term save me money?
It lowers the payment but raises total interest — $20,000 at 8% costs $4,332 in interest over 5 years vs. $9,118 over 10.
Can I pay off a loan early without penalty?
Most personal, auto, and student loans allow this, but some carry a prepayment penalty clause — check your loan agreement before assuming extra payments are free of charge.
How much does one extra payment per month actually save?
It depends on the loan size and rate, but even a modest extra amount early in the term can cut months or years off the payoff time, because it reduces the balance that all future interest is calculated on. Enter an amount in the "extra payment" field above to see your specific savings.
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Note: Assumes a fixed rate and equal monthly payments; actual offers may include fees that change the true cost. Not financial advice. Last reviewed: July 2026.