Loan Calculator

Calculate your loan payment before you borrow

Before taking out any loan — a mortgage, car loan, personal loan, or student loan — knowing the monthly payment and total interest cost helps you make an informed decision. This calculator uses the standard amortisation formula to show you exactly what you will pay each month and how much the loan will cost in total.

The loan payment formula

The monthly payment for a standard amortising loan is calculated using the formula:

M = P × [r(1+r)^n] / [(1+r)^n − 1]

Where:

• M = monthly payment
• P = principal (loan amount)
• r = monthly interest rate (annual rate ÷ 12, expressed as decimal)
• n = total number of monthly payments (years × 12)

This formula is called the amortisation formula and produces a fixed payment that covers both interest and principal over the loan term.

How amortisation works

With each monthly payment, a portion goes to interest and a portion reduces the principal. Early in the loan term, most of the payment is interest because the outstanding balance is large. As the balance decreases, the interest portion shrinks and the principal portion grows. By the final payment, almost all of it is principal.

For a $300,000 mortgage at 7% for 30 years:

• Monthly payment: approximately $1,995
• Total paid over 30 years: $718,200
• Total interest paid: $418,200 — more than the original loan amount

This illustrates why long loan terms cost so much more in interest. A 15-year mortgage at the same rate has a higher monthly payment but saves dramatically in total interest.

Effect of interest rate

Interest rate has a large impact on payment and cost. On a $200,000 loan over 30 years:

• At 4%: $955/month, $143,739 total interest
• At 6%: $1,199/month, $231,676 total interest
• At 8%: $1,468/month, $328,310 total interest

A 2 percentage point increase roughly doubles the interest cost over a 30-year term.

Types of loans

This calculator works for any standard amortising loan:

Mortgages: Home loans typically run 15 or 30 years in the US, 25-35 years in the UK and Canada. Fixed-rate mortgages have the same payment throughout the term; adjustable-rate mortgages change with an index.

Auto loans: Typically 48-84 months (4-7 years). Shorter terms mean higher payments but less total interest.

Personal loans: Usually 1-7 years. Rates vary widely based on creditworthiness, from 5% for excellent credit to 30%+ for poor credit.

Student loans: US federal student loans currently carry fixed rates of 5-8%, with income-based repayment options.

A worked example of the trade-off

Consider borrowing $250,000 at a 6% annual rate. Over 30 years, the monthly payment is about $1,499, and the total interest paid over the life of the loan comes to roughly $289,600 — more than the original amount borrowed. Over 15 years at the same rate, the monthly payment rises to about $2,110, noticeably more per month, but the total interest drops to around $129,800, well under half of the 30-year figure. Neither term is objectively correct; the right choice depends on what monthly payment fits your budget against how much total cost you are willing to accept for that flexibility.

Using the calculator for planning

You can use this calculator in multiple ways:

• Enter what you expect to borrow to see what the payment will be.
• Work backwards: if you can afford $X per month, try different loan amounts and rates to see the maximum you can borrow.
• Compare total interest at different term lengths to make a more informed decision about loan duration.

How to use the calculator

Enter the loan amount, the annual interest rate and the term in years, and the monthly payment appears immediately, along with the total amount you will pay over the life of the loan and the total interest that represents. Adjust any of the three inputs and every figure recalculates instantly, which makes it easy to compare how a shorter term, a different rate, or a larger down payment would change what you actually pay.

Extra payments and paying off a loan early

Making additional payments toward the principal, even small ones, can shorten a loan term and reduce total interest substantially, because every extra dollar applied to principal stops accruing interest for the remaining life of the loan. On a typical long-term mortgage, adding a modest amount to each monthly payment in the early years — when the balance and therefore the interest accrual are at their highest — has an outsized effect compared with making the same extra payment later in the term. Many lenders allow additional principal payments without penalty, though it is always worth confirming this before relying on the strategy, since some loan agreements charge an early-repayment fee.

Comparing loan terms side by side

Perhaps the most valuable use of this calculator is comparing how the same loan amount behaves across different terms. A shorter term always means a higher monthly payment but a lower total interest cost, because the balance is paid down faster and has less time to accrue interest against it. A longer term spreads the same amount over smaller payments, which can make a purchase affordable month to month, but at the cost of paying substantially more overall. Running the same principal and rate through this calculator at, say, 15 years and then 30 years side by side makes the trade-off between monthly affordability and total cost concrete rather than abstract, which is exactly the comparison worth making before signing any long-term loan agreement.

Private and instant

All calculations run entirely in your browser using the standard amortisation formula, so results update instantly as you adjust any input and no loan amounts, rates or terms you enter are ever sent to a server, logged or shared.