Calculate monthly loan payment, total interest and cost. Free loan calculator.
Taking out a loan is one of the most significant financial decisions you can make, whether it is for a car, education, home improvement, or debt consolidation. Understanding your monthly payment before signing a loan agreement helps you budget effectively and avoid overextending your finances. This calculator uses the standard amortization formula used by banks and lenders to compute your exact monthly payment, total interest paid over the life of the loan, and the total amount you will repay. Simply enter your loan amount, annual interest rate, and loan term to see a complete breakdown of your repayment schedule.
The calculator applies the standard fixed-rate amortization formula: M = P × r(1+r)^n / ((1+r)^n - 1), where M is the monthly payment, P is the principal loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. It then computes total interest as the total of all payments minus the principal. This formula assumes equal monthly payments throughout the loan term with no prepayments or rate changes.
Car buyers compare loan offers from different dealerships and banks. Students estimate monthly payments before committing to student loans. Homeowners evaluate personal loans for renovation projects. Small business owners plan equipment financing. Anyone considering debt consolidation can compare their current payments against a potential consolidation loan to see if they would save money.
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This calculator uses the standard amortization formula: monthly payment equals the principal multiplied by the monthly rate times one plus the monthly rate raised to the power of total payments, divided by one plus the monthly rate raised to the power of total payments minus one. This produces equal monthly payments over the life of the loan.
Three strategies reduce total interest: choosing a shorter loan term increases monthly payments but dramatically cuts total interest; making extra payments toward principal reduces the remaining balance faster; and securing a lower interest rate through better credit or refinancing directly reduces the cost of borrowing.
Yes, this calculator works for any fixed-rate installment loan including car loans, personal loans, student loans, and home equity loans. Simply enter the vehicle price minus your down payment as the loan amount, along with the offered interest rate and loan term.
The interest rate is the cost of borrowing the principal amount. The APR, or Annual Percentage Rate, includes the interest rate plus any additional fees and charges rolled into the loan, giving you a more complete picture of the true cost. When comparing loan offers, APR is generally the better metric to use.
A shorter term means higher monthly payments but significantly less total interest paid. A longer term lowers your monthly payment but increases the total cost of the loan. Choose the shortest term you can comfortably afford. For example, a 36-month car loan costs substantially less in total interest than a 72-month loan for the same amount.