How loan payments are calculated
This calculator uses the standard amortization formula for fixed-rate loans such as personal loans, auto loans and student loans. Each monthly payment is the same amount. Early payments are mostly interest, and later payments are mostly principal.
Example: $25,000 at 7.5% APR for 5 years (60 payments) is $500.95 a month. You'd pay about $5,057 in interest, $30,057 in total.
If the rate is 0%, the payment is simply the loan amount divided by the number of payments.
Ways to pay less interest
- Shorter term: higher monthly payments, but much less total interest.
- Lower rate: even half a percentage point adds up over several years. Compare offers using APR, which includes most fees.
- Extra payments: anything above the required payment goes to principal, which cuts future interest, as long as your lender has no prepayment penalty.
Loan payment table
Monthly payments at 9% APR. To use your own rate, enter it in the calculator above.
| Loan amount | 3 years | 5 years | 7 years |
|---|---|---|---|
| $5,000 | $159.00 | $103.79 | $80.45 |
| $10,000 | $318.00 | $207.58 | $160.89 |
| $15,000 | $477.00 | $311.38 | $241.34 |
| $20,000 | $635.99 | $415.17 | $321.78 |
| $25,000 | $794.99 | $518.96 | $402.23 |
| $30,000 | $953.99 | $622.75 | $482.67 |
| $40,000 | $1,271.99 | $830.33 | $643.56 |
| $50,000 | $1,589.99 | $1,037.92 | $804.45 |
Stretching a loan from 3 to 7 years lowers the payment by about half but more than doubles the interest you pay.
Where each payment goes
For the $25,000 loan at 7.5% over 5 years, every payment is $500.95, but the split changes. Interest is charged on the balance still owed, so it shrinks as you pay the loan down:
| Payment | Interest | Principal | Balance after |
|---|---|---|---|
| #1 | $156.25 | $344.70 | $24,655.30 |
| #12 | $131.80 | $369.15 | $20,718.42 |
| #30 | $87.99 | $412.96 | $13,664.84 |
| #48 | $38.98 | $461.97 | $5,774.13 |
| #60 | $3.11 | $497.84 | $0.00 |
In the first year you pay $1,729.81 in interest and cut the balance by $4,281.58. That is why extra payments early in a loan save the most.
Frequently asked questions
Is APR the same as the interest rate?
Not quite. APR includes the interest rate plus most lender fees, expressed as a yearly rate. Using APR here gives a closer estimate of your true cost. Your lender's exact payment may differ slightly due to fees or rounding.
Does this work for mortgages?
Yes for principal and interest, but a mortgage payment usually also includes property tax, insurance and sometimes PMI. Use the mortgage calculator for the full monthly cost.
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