Use this loan payment calculator to work out your monthly payment on any fixed-rate loan — personal loans, business loans, home improvement loans and more. You’ll also see the total interest cost and a year-by-year amortization schedule so you know exactly where every dollar goes.
The Loan Payment Formula
Where P is the amount borrowed, r is the monthly interest rate (annual rate ÷ 12) and n is the number of monthly payments. This is the standard amortization formula used by banks and lenders for fixed-rate loans.
Worked Example
Borrow $20,000 at 8% for 5 years: the monthly rate is 0.6667% and there are 60 payments. The formula gives a monthly payment of about $405.53, with roughly $4,330 of total interest over the life of the loan. Shorten the term to 3 years in the calculator above and watch the total interest fall by almost half.
How to Use the Result
Compare the monthly payment against your budget — lenders generally like to see all debt payments (including this one) stay under 36% of your gross monthly income. Also compare loans by total interest, not just monthly payment: a longer term feels cheaper each month but usually costs far more overall.
Frequently Asked Questions
What is a fixed-rate loan?
A loan whose interest rate stays the same for its entire term, so every monthly payment is identical and fully predictable.
Why do I pay more interest at the start of a loan?
Interest is charged on the remaining balance. Early on the balance is highest, so a larger share of each payment goes to interest — open the amortization schedule above to see the shift.
Does making extra payments reduce total interest?
Yes. Extra payments reduce principal immediately, which lowers every future interest charge and shortens the payoff date.