Loan Repayment Calculator

How to Calculate Your Loan Payment

Your monthly loan payment depends on three things: how much you borrow (the principal), the interest rate, and how long you have to pay it back (the term). Change any one of these and your payment changes too.

The formula behind every loan payment calculator is the standard amortization formula. You do not need to memorize it -- that is what this calculator does for you. But understanding the basics helps you make better borrowing decisions:

• Borrow less, pay less. A $20,000 loan at 6% for 5 years costs $386/month. A $25,000 loan at the same rate and term costs $483/month -- $97 more every single month.
• Lower rates save thousands. That same $25,000 loan at 4% instead of 6% saves you over $1,300 in total interest.
• Shorter terms mean higher payments but less interest. A $25,000 loan at 6% over 3 years costs $760/month but only $2,370 in total interest. Over 5 years, the payment drops to $483 but interest jumps to $3,900.

What Is Loan Amortization?

Amortization is how your loan gets paid off over time. Each monthly payment splits into two parts: one portion goes toward interest and the other goes toward paying down the principal balance.

Here is the part most people do not realize: in the early months, most of your payment goes to interest. Very little actually reduces what you owe. As you progress through the loan, the split gradually shifts -- more goes to principal, less to interest.

For example, on a $200,000 mortgage at 7% over 30 years:

• Month 1: $1,167 goes to interest, only $164 goes to principal
• Month 180 (halfway): $787 goes to interest, $544 goes to principal
• Month 360 (final): $9 goes to interest, $1,322 goes to principal

This is why making extra payments early in your loan has such a big impact -- you are attacking the principal when interest charges are at their highest.

How Extra Payments Save You Money

Making additional payments beyond your minimum is the single most effective way to save money on any loan. Every extra dollar you pay goes directly to reducing your principal, which means less interest accrues in future months.

The math is straightforward. On a $25,000 personal loan at 7% over 5 years:

• Minimum payments only: $495/month, $4,700 total interest, paid off in 60 months
• $100 extra per month: $595/month, $3,400 total interest, paid off in 46 months -- you save $1,300 and finish 14 months early
• $200 extra per month: $695/month, $2,600 total interest, paid off in 38 months -- you save $2,100 and finish 22 months early

Use the "Increase Payment" slider in the calculator above to see exactly how extra payments affect your specific loan.

Fixed Rate vs. Variable Rate Loans

The type of interest rate on your loan determines how predictable your payments will be:

Fixed rate loans

Your interest rate stays the same for the entire life of the loan. Your monthly payment never changes. This makes budgeting simple and protects you if interest rates rise. Most mortgages, auto loans, and personal loans offer fixed rates.

Variable rate loans

Your interest rate adjusts periodically based on a benchmark rate (like the prime rate or SOFR). When rates go up, your payment goes up. When rates drop, your payment drops. Variable rates often start lower than fixed rates, but they carry risk. Common examples include adjustable-rate mortgages (ARMs), HELOCs, and some private student loans.

In a rising-rate environment, fixed-rate loans are generally safer. If you have a variable-rate loan and rates are climbing, consider refinancing to a fixed rate to lock in predictable payments.

Common Types of Loans

Mortgages

The largest loan most people ever take. Typical terms are 15 or 30 years. Secured by the property itself. Rates depend on your credit score, down payment, and market conditions. Even small rate differences matter enormously -- a 0.5% rate difference on a $300,000 mortgage adds up to over $30,000 in extra interest over 30 years.

Auto loans

Usually 3-7 year terms. Secured by the vehicle. New car rates are typically lower than used car rates. Keep the term as short as you can afford -- cars depreciate quickly, and a long loan means you can end up owing more than the car is worth.

Personal loans

Unsecured loans (no collateral) used for debt consolidation, home improvements, medical expenses, or large purchases. Terms typically range from 2-7 years. Rates are higher than secured loans because the lender takes on more risk.

Student loans

Federal student loans offer fixed rates set by Congress, income-driven repayment plans, and forgiveness programs. Private student loans have variable or fixed rates based on creditworthiness. Always exhaust federal options before turning to private lenders.

Strategies to Pay Off Your Loan Faster

1. Make biweekly payments

Instead of 12 monthly payments per year, make 26 half-payments (every two weeks). This sneaks in one extra full payment per year without you feeling it. On a $200,000 mortgage at 7%, biweekly payments shave about 5 years off a 30-year term and save over $40,000 in interest.

2. Round up your payments

If your payment is $473, pay $500 instead. The extra $27/month adds up over time and you barely notice it. On a 5-year loan, this can cut months off your payoff date.

3. Apply windfalls to principal

Tax refunds, bonuses, gift money -- put them toward your loan principal instead of spending them. A single $2,000 payment on a $25,000 loan at 7% saves you hundreds in interest.

4. Refinance when rates drop

If interest rates fall below your current rate, refinancing can lower your payment or shorten your term. The general rule: refinancing makes sense when you can reduce your rate by at least 0.75-1% and you plan to keep the loan long enough to recoup the closing costs.

5. Use the debt avalanche method

If you have multiple loans, focus extra payments on the one with the highest interest rate first while making minimum payments on the rest. Once the highest-rate loan is gone, roll that payment into the next highest. This minimizes total interest paid across all your debts.

How to Use This Loan Calculator

This calculator shows you exactly what your loan will cost -- monthly payment, total interest, and payoff date.

1. Enter your loan amount -- the total amount you are borrowing.
2. Choose your calculation method -- "Loan Term" lets you set the repayment period; "Minimum Payment" lets you set a payment amount and see how long payoff takes.
3. Enter the interest rate -- your annual percentage rate (APR).
4. Click Calculate -- see your monthly payment, total payment, total interest, and payoff date.
5. Use the payment slider -- drag it right to see how increasing your monthly payment reduces total interest and shortens your loan.

The chart shows how your balance, interest, and cumulative payments change over the life of the loan. Try different combinations to find the right balance between affordable monthly payments and total cost.

Frequently Asked Questions

How do I calculate my monthly loan payment?

Your monthly payment is determined by the loan amount, interest rate, and term. The standard formula uses amortization math, but the easiest way is to use a loan calculator like the one above. Enter your loan details and get an instant answer with a full breakdown of principal vs. interest.

How much interest will I pay over the life of my loan?

Total interest depends on the loan amount, rate, and term. A $25,000 loan at 7% for 5 years costs about $4,700 in interest. The same loan over 7 years costs $6,700 -- almost $2,000 more. Shorter terms always mean less total interest, even though the monthly payment is higher.

Does making extra payments actually help?

Yes, significantly. Every extra dollar goes directly toward reducing your principal, which means less interest accrues in future months. Even an extra $50-100/month can save you thousands in interest and shorten your loan by months or even years. Use the slider in the calculator above to see the exact impact.

What is the difference between APR and interest rate?

The interest rate is the cost of borrowing the principal. The APR (Annual Percentage Rate) includes the interest rate plus any fees, points, or other costs rolled into the loan. APR gives you a more accurate picture of the true cost of borrowing. When comparing loans from different lenders, always compare APR to APR.

Should I choose a shorter or longer loan term?

It depends on your budget. Shorter terms have higher monthly payments but cost far less in total interest. Longer terms have lower monthly payments but you pay significantly more over the life of the loan. The best approach is to choose the shortest term you can comfortably afford while still leaving room in your budget for emergencies and savings.

Does paying biweekly really save money?

Yes. Biweekly payments (every two weeks) result in 26 half-payments per year, which equals 13 full monthly payments instead of 12. That one extra payment per year goes entirely to principal. On a 30-year mortgage, this can cut 4-6 years off the loan and save tens of thousands in interest.

When does refinancing make sense?

Refinancing is worth considering when you can lower your rate by at least 0.75-1%, you plan to keep the loan long enough to break even on closing costs, and your credit score has improved since you originally borrowed. Run the numbers with a calculator to compare your current total cost vs. the refinanced total cost including fees.