How to use the loan calculator
Enter the amount you plan to borrow, the annual interest rate (APR) and how long you will take to repay it. The calculator shows your fixed monthly payment, the total interest over the life of the loan and the total you will pay back. Add an optional extra payment to see how much sooner you could be debt free.
The loan payment formula
Fixed-rate loans use Payment = P × r / (1 − (1+r)−n), where P is the amount borrowed, r is the monthly rate (APR divided by 12) and n is the number of monthly payments. Each payment first covers that month's interest and the remainder reduces the balance.
Interest rate vs APR
The interest rate is the cost of borrowing the money. APR also folds in fees such as origination charges, so it is the better number for comparing offers. This calculator treats the rate you enter as the rate used to compute interest, so enter the APR if you want a close all-in estimate.
Ways to pay less interest
- Choose the shortest term you can comfortably afford.
- Make extra principal payments whenever possible.
- Improve your credit score before applying to qualify for a lower rate.
- Compare at least three lenders, including credit unions.
Frequently asked questions
How do I calculate my monthly loan payment?
Use Payment = P x r / (1 - (1+r)^-n), with r as the monthly rate and n as the number of payments. This calculator does it for you.
Is a longer loan term better?
A longer term lowers the monthly payment but increases the total interest you pay. A shorter term costs more each month and less overall.
Does paying extra reduce the interest?
Yes. Extra payments go toward principal, which lowers the balance that interest is charged on.
Does this work for a car loan or student loan?
Yes, as long as the loan has a fixed rate and equal monthly payments. Variable-rate or interest-only loans will differ.