Skip to content
¢CentCalc

Loan Calculator

Calculate your monthly payment, full amortization schedule, and how extra payments save you money.

$
%
yr

Monthly Payment

$16,666.67

Total Paid

$1,000,000

Total Interest

$975,000

Principal

$25,000

Principal 2.5% Interest 97.5%

Amortization Schedule (by year)

YearPrincipalInterestBalance
1$0$200,000$25,000
2$0$200,000$25,000
3$0$200,000$25,000
4$55$199,945$24,945
5$25,054$174,946$0
See how extra payments save interest
$
Researched by CentCalc Financial Editorial TeamData: Standard amortization formula (monthly compounding)

How Loan Payments Are Calculated

An installment loan (auto, personal, or student) is repaid in equal monthly payments using the standard amortization formula:

M = P × [r(1+r)n] / [(1+r)n − 1]

Where M is the monthly payment, P is the loan principal,r is the monthly interest rate (APR ÷ 12), and n is the total number of payments (term in years × 12).

Each payment covers that month's interest first — the rest goes to principal. Early in the loan, most of each payment is interest; later, most is principal. That's why extra payments early on save the most interest.

Example: A $25,000 loan at 8% APR for 5 years → r = 0.00667, n = 60. Monthly payment ≈ $507. Total paid ≈ $30,415, of which $5,415 is interest.

Assumes a fixed rate and level payments. Does not include origination fees, insurance, or taxes.

See our full methodology for every formula, data source, and assumption.

Frequently Asked Questions

How is a loan payment calculated?
Fixed-rate installment loans use the amortization formula M = P × [r(1+r)^n] / [(1+r)^n − 1]. Each payment covers the month's interest first; the remainder reduces principal.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal. APR includes the interest rate plus fees, so it reflects the true annual cost and is usually higher. Compare APRs when loan shopping.
How do extra payments reduce my loan?
Extra payments go to principal, lowering the balance that future interest is charged on. This shortens the term and cuts total interest — often by hundreds of dollars on a 5-year loan.
Does this work for auto, personal, and student loans?
Yes — any fixed-rate, fully-amortizing loan uses this formula. It does not handle variable rates, interest-only periods, or income-driven student repayment plans.

Get out of debt faster

Proven strategies from experts

Affiliate Disclosure:As an Amazon Associate, CentCalc earns from qualifying purchases. This means if you click an affiliate link and make a purchase on Amazon, we may receive a small commission at no additional cost to you. This helps support our free calculators. We only recommend products we believe are genuinely helpful.

❄️

The Total Money Makeover (Dave Ramsey)

The debt snowball method. Ramsey's plan turns the "minimum payment forever" trap our calculator reveals into a concrete exit timeline.

Check price on Amazon
🧠

The Psychology of Money (Morgan Housel)

The single best book on why most people underperform compounding. Short, practical, and shifts your mindset from "picking stocks" to "time in the market."

Check price on Amazon

Related Calculators

Mortgage

Calculate monthly mortgage payments, total interest, and amortization.

CC Payoff

How long to pay off your credit card? Snowball vs avalanche.

DTI

Calculate your DTI ratio — critical for mortgage qualification.

★ ProComing soon

CentCalc Pro is coming — compare scenarios, export PDF, save history

  • Side-by-side scenarios
  • Export to PDF / CSV
  • Save calculation history
Join the waitlistBe first to know when it launches

Estimates only. Actual loan terms, fees, and rates vary by lender. Consult your lender for exact figures.