How to Calculate Loan Payments
This loan calculator helps you determine the monthly payments on a loan. Simply enter the loan amount, term, and interest rate to calculate your monthly loan payments.
The Formula
The formula for calculating the monthly payment for a fixed-rate loan is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]- M= Total monthly payment
- P= The total amount of your loan
- i= Your monthly interest rate (annual rate ÷ 12)
- n= The total number of months in your timeline
Understanding the Results
Monthly Payment: The amount you need to pay every month to pay off the loan within the specified term.
Total Interest: The total amount of money you will pay in interest over the life of the loan.
Total Payment: The sum of the loan amount plus the total interest paid.
Tips for Borrowers
- A shorter loan term usually means higher monthly payments but less total interest paid.
- Even a small difference in interest rate can save you thousands of dollars over the life of a mortgage.
- Consider making extra payments if your loan allows it to pay off the debt faster.
- Shop around for the best interest rates and loan terms before committing to a loan.