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Verified calculator with a transparent formula
Loan Amortization Calculator.
Calculates the monthly payment and total interest for a fixed-rate loan, and shows the amortization schedule summary.
Your inputs
How it works
- 1
Enter the loan amount, annual interest rate, and loan term in years.
- 2
The calculator converts the annual rate to a monthly rate by dividing by 1200.
- 3
It computes the monthly payment using the standard amortization formula.
- 4
It then calculates total interest and total cost over the loan term.
loan_amount * (annual_rate/1200) / (1 - pow(1 + annual_rate/1200, -loan_term_years*12))Frequently asked questions
How is the monthly payment calculated?
The monthly payment is calculated using the formula: P * r / (1 - (1 + r)^-n), where P is the loan amount, r is the monthly interest rate (annual rate / 12), and n is the number of monthly payments.
What does total interest paid mean?
Total interest paid is the sum of all interest charges over the life of the loan, calculated as total payments minus the original loan amount.
Can I use this for a car loan or personal loan?
Yes, this calculator works for any fixed-rate amortizing loan, including car loans, personal loans, and mortgages.
Explore this calculator category
Results
Formula checkedEstimate for general guidance only — verify important decisions with an appropriate professional.
How it works
Calculates the monthly payment and total interest for a fixed-rate loan, and shows the amortization schedule summary.
- Enter the loan amount, annual interest rate, and loan term in years.
- The calculator converts the annual rate to a monthly rate by dividing by 1200.
- It computes the monthly payment using the standard amortization formula.
- It then calculates total interest and total cost over the loan term.
Formulas
The math behind this calculator, written out so you can verify the result.
Monthly Payment Formula
M is the monthly payment, P is the principal, r is the monthly interest rate (annual rate divided by 12), and n is the number of payments (years × 12).
Example:
Input: P = $200,000, r = 5.5%/12 = 0.004583, n = 30×12 = 360
Calculation: 200000 × 0.004583 × (1.004583)^360 / ((1.004583)^360 - 1)
Result: ≈ $1,135.58
Real-world use cases
Where this calculation shows up in everyday life.
Mortgage Planning
Estimate monthly mortgage payments and total interest for a home loan.
Example: Compare a 15-year vs 30-year mortgage.
Auto Loan Budgeting
Determine affordable car payments based on loan amount and term.
Example: See how a longer term lowers monthly payments but increases total interest.
Personal Loan Comparison
Evaluate different loan offers by comparing monthly payments and total costs.
Example: Choose between a 5-year and 7-year personal loan.
Tips and common mistakes
Tips
- A shorter loan term usually means higher monthly payments but much less total interest.
- Even a small reduction in interest rate can save thousands over a long loan.
- Making extra payments can significantly reduce the total interest and shorten the loan term.
- Use this calculator to compare different loan scenarios before committing.
Common Mistakes to Avoid
- Using the annual rate directly in the formula instead of dividing by 12.
- Forgetting to convert the loan term to months (multiply years by 12).
- Ignoring additional fees or taxes that may affect the actual monthly payment.
Assumptions and limitations
- Use the stated inputs and units.
- Results are estimates for planning and education.
- Check measurements and source data before making an important decision.