General Loan Calculator

Calculate monthly payments, total interest, and view a full amortization summary for any loan. Works for personal loans, business loans, and more.

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Results will appear here with a full amortization breakdown

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Understanding Loan Payments

A loan is a sum of money borrowed from a lender that must be repaid over a set period with interest. The most common type is an amortizing loan, where each monthly payment includes both principal and interest. Early in the loan term, most of your payment goes toward interest. Over time, the balance shifts so more of each payment reduces your principal.

The monthly payment amount depends on three key factors: the loan amount (principal), the annual interest rate, and the loan term (how long you have to repay). A longer term means lower monthly payments but significantly more total interest paid. Conversely, a shorter term means higher monthly payments but less total interest.

Understanding the true cost of borrowing is critical for sound financial planning. For example, a $50,000 loan at 5.5% for 10 years costs about $15,117 in total interest. Extending that same loan to 20 years would cost roughly $32,780 in interest -- more than double -- even though monthly payments are lower.

Before taking any loan, compare the Annual Percentage Rate (APR) across lenders, consider the total cost of borrowing, and evaluate whether the monthly payment fits comfortably within your budget. A good rule of thumb is that total debt payments should not exceed 36% of your gross monthly income.

This calculator uses the standard amortization formula used by banks and financial institutions worldwide, giving you results that closely match what lenders will offer.

The Loan Payment Formula

Monthly Payment (PMT) Formula

PMT = P × [r(1+r)n] / [(1+r)n − 1]

Where:

PMT = Monthly payment amount

P = Principal (loan amount)

r = Monthly interest rate (annual rate / 12)

n = Total number of payments (years x 12)

Example

For a $50,000 loan at 5.5% APR for 10 years:

  • • Monthly rate (r) = 5.5% / 12 = 0.004583
  • • Number of payments (n) = 10 x 12 = 120
  • • PMT = 50,000 x [0.004583 x 1.004583^120] / [1.004583^120 - 1]
  • • PMT = $542.64 per month
  • • Total paid = $542.64 x 120 = $65,116.80
  • • Total interest = $65,116.80 - $50,000 = $15,116.80

Frequently Asked Questions

How is the monthly payment calculated?
The monthly payment is calculated using the standard amortization formula: PMT = P x [r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate, and n is the total number of payments. This ensures each payment covers interest and gradually reduces the principal.
What is the difference between interest rate and APR?
The interest rate is the cost of borrowing the principal. The APR (Annual Percentage Rate) includes the interest rate plus any fees or costs associated with the loan, making it a more comprehensive measure of the true cost of borrowing.
Should I choose a longer or shorter loan term?
A shorter loan term means higher monthly payments but significantly less total interest. A longer term lowers monthly payments but increases total interest substantially. Choose based on what fits your monthly budget while minimizing total cost.
Can I pay off my loan early?
Most loans allow early payoff, but some charge prepayment penalties. Check your loan agreement. Making extra payments toward principal can save thousands in interest and shorten your loan term.
How does the amortization schedule work?
An amortization schedule shows how each payment is split between principal and interest over the life of the loan. Early payments are mostly interest. Over time, more of each payment goes toward reducing the principal balance.