Loan Payment Calculator
Loan Payment Calculator
Amortization is the process of paying off a loan through fixed monthly payments, where each payment covers both interest and a portion of the principal — early payments are mostly interest, later payments are mostly principal. This calculator applies the standard amortization formula used by banks and lenders worldwide to compute your exact monthly payment.
Borrowers use this before taking out a personal loan, auto loan, or any fixed-term debt to understand the true monthly commitment and total cost, since the total interest paid can add up to a substantial fraction of the loan amount, especially over longer terms.
- Standard Amortization Formula: The same math used by banks: PMT = P × r × (1+r)ⁿ / ((1+r)ⁿ - 1).
- Fixed Monthly Payment: Assumes a fixed interest rate and equal monthly payments for the entire term — the most common loan structure.
- Total Interest Matters: Shorter terms mean higher monthly payments but significantly less total interest paid over the life of the loan.
Why is my total interest so much higher on a longer loan term?
Interest accrues on the outstanding balance every month; a longer term means the balance stays higher for longer, so more total interest accumulates even though each individual payment is smaller.
Does this work for any type of loan?
Yes — this formula applies to any fixed-rate, fixed-term loan with equal monthly payments: personal loans, auto loans, student loans, and mortgages alike.
Loan Payment Calculator
Amortization is the process of paying off a loan through fixed monthly payments, where each payment covers both interest and a portion of the principal — early payments are mostly interest, later payments are mostly principal. This calculator applies the standard amortization formula used by banks and lenders worldwide to compute your exact monthly payment.
Borrowers use this before taking out a personal loan, auto loan, or any fixed-term debt to understand the true monthly commitment and total cost, since the total interest paid can add up to a substantial fraction of the loan amount, especially over longer terms.
- Standard Amortization Formula: The same math used by banks: PMT = P × r × (1+r)ⁿ / ((1+r)ⁿ - 1).
- Fixed Monthly Payment: Assumes a fixed interest rate and equal monthly payments for the entire term — the most common loan structure.
- Total Interest Matters: Shorter terms mean higher monthly payments but significantly less total interest paid over the life of the loan.
Why is my total interest so much higher on a longer loan term?
Interest accrues on the outstanding balance every month; a longer term means the balance stays higher for longer, so more total interest accumulates even though each individual payment is smaller.
Does this work for any type of loan?
Yes — this formula applies to any fixed-rate, fixed-term loan with equal monthly payments: personal loans, auto loans, student loans, and mortgages alike.