Payment Calculator — Free Online Loan Payment Tool

How to Use the Payment Calculator

This payment calculator gives you an instant, accurate estimate of your monthly loan payment for any type of fixed-rate installment loan. Whether you are evaluating a new loan offer, checking an existing payment, or planning your budget, follow these steps for a complete analysis.

1. Enter the loan amount. Input the total principal you plan to borrow. For a new loan, this is the borrowed amount. For an existing loan, enter the current remaining balance if you want to see the payment on that balance. The calculator accepts any amount from personal loans of a few thousand dollars to large purchases in the hundreds of thousands.
2. Set the annual interest rate. Input the APR from your loan offer, pre-approval letter, or current loan statement. This is the annual percentage rate, not the monthly rate. The calculator automatically converts it to a monthly rate for the payment calculation. If you are comparing offers, try each rate to see how it affects the payment. Even a difference of 0.5% can save or cost hundreds over the loan term.
3. Choose the loan term. Select the repayment period in months. The calculator offers common terms from 12 to 120 months. Shorter terms have higher monthly payments but lower total interest. Longer terms have lower payments but significantly higher total interest. Try multiple terms to find the best balance between monthly affordability and total cost.
4. Review your results. The calculator instantly displays your monthly payment, total interest over the life of the loan, total repayment amount (principal plus interest), and the estimated payoff date. The pie chart shows the proportion of your total cost that goes to principal versus interest.
5. Examine the amortization schedule. Click the toggle to view the complete month-by-month breakdown. Each row shows the payment number, total payment, portion going to principal, portion going to interest, and the remaining balance. This schedule reveals how the principal-to-interest ratio shifts over time, with early payments being heavily weighted toward interest.

For a more detailed analysis including extra payments, use our repayment calculator. For loans with down payments and trade-ins, use our auto loan or mortgage calculator.

Loan Payment Formula

The monthly loan payment is calculated using the standard fixed-rate amortization formula. This formula ensures that each equal monthly payment gradually pays off both the interest and the principal over the loan term, resulting in a zero balance at the final payment.

Where:

• M = Monthly payment
• P = Principal (loan amount)
• r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
• n = Total number of monthly payments

Worked Example

Calculate the monthly payment for a $25,000 loan at 7.5% annual interest over 60 months:

1. Monthly interest rate: 7.5% ÷ 12 = 0.625% = 0.00625
2. Rate factor: (1 + 0.00625)⁶⁰ = 1.4533
3. Numerator: $25,000 × 0.00625 × 1.4533 = $227.08
4. Denominator: 1.4533 − 1 = 0.4533
5. Monthly payment: $227.08 ÷ 0.4533 = $500.84
6. Total payments: $500.84 × 60 = $30,050
7. Total interest: $30,050 − $25,000 = $5,050

The first month payment of $500.84 splits into $156.25 interest ($25,000 × 0.00625) and $344.59 principal. The new balance is $24,655.41. Each subsequent month, the interest portion decreases and the principal portion increases because the remaining balance is lower, but the total payment stays the same.

Practical Payment Examples

These scenarios show how the payment calculator applies to common borrowing situations in 2026.

Used Car Purchase

Angela is financing a $18,000 used car at 6.9% APR for 48 months through her credit union. Her monthly payment is $429.12. Over the 48-month term, she pays $20,598 total, which includes $2,598 in interest. By month 24 (halfway), her remaining balance is $9,564, meaning she has built $8,436 in equity. If Angela chose a 60-month term instead, her payment would drop to $356.05 per month but total interest would increase to $3,363, costing $765 more. She chose the 48-month term to save on interest and ensure she is never underwater on the car.

Home Improvement Loan

Kevin is borrowing $35,000 for a kitchen renovation at 8.5% APR for 84 months. His monthly payment is $544.78. Total payments over 7 years are $45,762, including $10,762 in interest. The amortization schedule shows that in the first year, he pays $2,849 in interest and $3,688 in principal. By year 4 (month 48), his remaining balance is $17,854 and the interest-to-principal split has shifted to approximately 40/60. Kevin could save $3,247 in interest by choosing a 60-month term ($702.46/month), but the higher payment would strain his monthly budget during the renovation period.

Debt Consolidation Loan

Sophia is consolidating $22,000 in credit card debt (averaging 21% APR) into a personal loan at 9.5% APR for 60 months. Her new monthly payment is $461.01, compared to the combined credit card minimums of $550 that were barely covering interest. Total interest on the personal loan is $5,661 over 5 years. If she had continued paying $550/month on the credit cards at 21%, payoff would take over 6 years and cost $17,600 in interest. The consolidation loan saves her $11,939 in interest and pays off the debt 12 months sooner, despite the lower monthly payment.

Small Business Equipment Purchase

A landscaping company finances $45,000 in equipment at 7.0% APR for 60 months. The monthly payment is $891.01. Total payments are $53,461 with $8,461 in interest. The business writes off the interest as a business expense and takes Section 179 depreciation on the equipment in year one. By making the standard payments, the equipment is fully paid off in 5 years. If the business adds $200/month in extra payments, payoff happens in approximately 47 months, saving about $1,500 in interest.

Payment Tips and Complete Guide

Understanding how loan payments work empowers you to make smarter borrowing decisions, negotiate better terms, and avoid paying more than necessary in interest over the life of any loan.

How to Lower Your Monthly Payment

There are four ways to reduce your monthly loan payment: borrow less (reduce principal), get a lower interest rate (improve credit score, shop multiple lenders, or use collateral), extend the loan term (increases total interest but lowers each payment), or make a larger down payment (reduces the financed amount). Of these, getting a lower rate is the most cost-effective because it reduces both the monthly payment and the total interest. Extending the term lowers the payment but increases total cost, so it should be used strategically rather than as a default choice.

The Power of Bi-Weekly Payments

Instead of making 12 monthly payments per year, making 26 half-payments every two weeks effectively creates one extra full payment per year. On a $25,000 loan at 7.5% for 60 months, this strategy pays off the loan in approximately 54 months (6 months early) and saves about $450 in interest. The benefit increases with larger loans and longer terms. Not all lenders accept bi-weekly payments directly, but you can simulate this by adding 1/12 of your monthly payment to each regular payment (in this case, about $42/month extra).

When to Refinance an Existing Loan

Refinancing makes financial sense when you can secure a rate at least 1-2 percentage points lower than your current rate, your credit score has improved significantly since the original loan, market rates have dropped, or you want to change your term. Before refinancing, calculate the break-even point: if refinancing costs $500 in fees and saves $75/month, you break even after 7 months. Do not extend the remaining term when refinancing unless absolutely necessary, as this restarts the amortization clock and could cost more in total interest despite the lower rate.

Understanding APR vs. Interest Rate

The interest rate is the cost of borrowing the principal. The APR (annual percentage rate) includes the interest rate plus mandatory fees, origination charges, and other costs, spread over the loan term. The APR is always equal to or higher than the interest rate. When comparing loan offers, always use APR because it reflects the true cost of borrowing. A loan with a 6.5% interest rate and $1,500 in fees might have a 7.2% APR, making it more expensive than a loan with a 7.0% rate and no fees (7.0% APR).

Common Mistakes to Avoid

• Choosing the longest term to minimize payments. A 7-year term on a $25,000 loan at 7.5% costs $7,245 in interest versus $5,050 for a 5-year term. The $117/month savings costs you $2,195 extra in interest. Always choose the shortest term you can comfortably afford.
• Ignoring the total cost of the loan. Focus on total repayment (principal plus interest), not just the monthly payment. A lower monthly payment over a longer term often means a significantly higher total cost.
• Not shopping multiple lenders. Rates can vary 1-3% between lenders for the same borrower. Get quotes from at least three sources: your bank, a credit union, and an online lender. Multiple loan inquiries within a 14-day window count as a single credit pull.
• Borrowing more than you need. Every extra dollar borrowed costs interest over the life of the loan. On a $5,000 over-borrow at 7.5% for 60 months, you pay $1,010 extra in interest. Borrow only what you need and use savings for the rest.
• Skipping the amortization schedule. The schedule reveals important insights about your loan, including when you reach the halfway point on principal, how much interest you have paid at any point, and the best time to refinance or make extra payments. Review it before and during the loan.