Loan Calculator
Estimate your monthly loan payment, total interest cost, and complete repayment amount with our free loan amortization calculator.
Formula & Mathematical Methodology
Where M is monthly payment, P is principal balance, r is monthly interest rate (annual rate / 12 / 100), and n is total monthly payments (years × 12).
How to Use This Loan Calculator
- Enter the loan amount you wish to borrow.
- Enter the quoted annual percentage interest rate (APR).
- Select the loan repayment term in years.
- Click Calculate to see your monthly payment and total lifetime interest.
Step-by-Step Worked Example
Scenario: $25,000 borrowed at 6.5% interest over 5 years (60 months)
What Does Your Result Mean?
A longer loan term lowers your required monthly payment, but increases the total cumulative interest paid over the life of the loan.
Common Practical Applications:
- Personal bank loans
- Auto financing comparison
- Debt consolidation loans
Important Limitations & Assumptions:
- Does not include bank origination fees, closing costs, or prepayment penalties.
Frequently Asked Questions
What is loan amortization?
Amortization is the process of spreading out a loan into a series of equal periodic payments. Early payments primarily cover interest, while later payments pay down principal.
How can I lower my total interest costs?
You can lower total interest by choosing a shorter loan term, securing a lower APR, or making extra principal payments.