Principal vs. interest
How much of your total payments is the amount borrowed versus interest. Updates as you change the inputs.
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Loan Calculator
Work out the monthly payment and total interest for any fixed-rate loan, personal, auto, business, or otherwise, from the amount, rate, and term.
Monthly payment
$492
Loan amount$20,000
Total of all payments$23,633
Payoff time48 months
Total interest$3,633
How it works
Enter the loan amount, annual interest rate, and term in months to get a standard fixed monthly payment using an amortization formula. Add an optional extra monthly payment to see how much faster the loan is paid off and how much interest that saves.
The loan payment formula
M = P × [ r(1+r)^n ] / [ (1+r)^n − 1 ]
M = monthly payment
P = loan amount (principal)
r = monthly interest rate (annual rate ÷ 12)
n = total number of monthly payments
M = monthly payment
P = loan amount (principal)
r = monthly interest rate (annual rate ÷ 12)
n = total number of monthly payments
Worked example
For a $20,000 loan at 8.5% APR over 48 months with no extra payments:
| Item | Amount |
|---|---|
| Loan amount | $20,000 |
| Monthly payment | $492 |
| Total of all payments | $23,633 |
| Total interest paid | $3,633 |
Ways to lower your total interest
- Choose the shortest term you can comfortably afford, term length affects total interest more than most borrowers expect.
- Make extra principal payments when possible; even small amounts compound into meaningful savings.
- Improve your credit profile before applying, since rate tiers can shift the total cost substantially.
- Compare APR, not just the advertised interest rate, across lenders.
Frequently asked questions
How do I calculate a loan payment by hand?
Convert the annual rate to a monthly rate, then apply the amortization formula above with your loan amount and number of payments.
Why does a longer loan term cost more overall?
Interest accrues for longer, so even though the rate stays the same, the total interest paid rises as the term lengthens.
What's the difference between APR and interest rate?
APR includes the interest rate plus most lender fees, expressed yearly, it's the better figure for comparing offers.
Does paying extra toward principal actually save money?
Yes, extra principal payments reduce the balance interest is calculated on, shortening the loan and cutting total interest.
How much can an extra payment save me?
It depends on the balance, rate, and term, but even a small extra payment each month can shorten the payoff date and reduce thousands of dollars in interest over the loan's life.