CalHub

Loan Payment Calculator

Find the monthly payment, total cost and interest on a loan.

Monthly payment ($) 386.66
Total paid ($) 23,199.36
Total interest ($) 3,199.36

Formula: M = P·r ÷ (1 − (1 + r)^−n), r = monthly rate, n = months

Step-by-step with your numbers:
1. Values used:
2. Loan amount = 20,000 $
3. Annual interest rate = 6 %
4. Term = 5 years
5.
6. Monthly payment = 386.66$
7. Total paid = 23,199.36$
8. Total interest = 3,199.36$
Did we solve your problem today?

Estimate the monthly payment for a car loan, personal loan or mortgage, plus how much interest you'll pay overall.

How the Math Works

The Loan Payment Calculator uses the standard loan payment formula: M = P·r ÷ (1 − (1 + r)^-n). Here, M represents 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 payments. This formula accounts for both principal and interest by compounding the rate over the loan term, ensuring that each payment covers the interest accrued while gradually reducing the principal balance. The denominator (1 - (1 + r)^-n) adjusts for the present value of future payments, making it possible to calculate a fixed monthly amount that fully pays off the loan by maturity.

Practical Applications

To use the calculator, input the loan amount (principal), annual interest rate, and loan term in years. Convert the annual rate to a monthly rate by dividing by 12 (e.g., 6% annual rate becomes 0.5% monthly). Multiply the loan term in years by 12 to get the total number of payments (n). Plug these values into the formula to solve for M. For example, a $10,000 loan at 6% annual interest over 5 years would use P = 10000, r = 0.005, and n = 60. The calculator also computes the total cost by multiplying M by n and subtracts P to find total interest paid.

Day-to-Day Use

This tool simplifies everyday financial decisions by revealing the true monthly cost of borrowing, helping users budget effectively for expenses like car loans, mortgages, or personal loans. By adjusting variables such as interest rates or loan terms, users can compare different offers side-by-side to find the most affordable option. It also highlights the long-term impact of interest, encouraging smarter choices like refinancing or paying off loans early. Whether planning a major purchase or managing existing debt, the calculator provides clarity to avoid overborrowing and ensures financial stability.

Worked example

$20,000 at 6% over 5 years → $386.66/month, $23,199 total, $3,199 interest.

FAQ

Why does a longer term cost more?

Lower monthly payments mean you carry the balance longer, so more interest accrues overall.

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