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Financial
Loan Calculator
Calculate monthly payments, total interest, and total amount paid on a standard amortized loan.
How the Loan Calculator Works
This calculator uses the standard amortization formula to compute your fixed monthly payment for a loan given its principal, annual interest rate, and repayment term in years. Amortization means each monthly payment covers both interest accrued that month and a portion of the principal.
Formula Used
M = P × [r(1 + r)ⁿ] ÷ [(1 + r)ⁿ − 1]
- M
- — fixed monthly payment amount
- P
- — loan principal (the amount borrowed)
- r
- — monthly interest rate = annual rate ÷ 12 ÷ 100
- n
- — total number of monthly payments = years × 12
Example Calculation
Suppose you borrow $20,000 at an annual interest rate of 6% over 5 years (60 months). The monthly rate r = 6 ÷ 12 ÷ 100 = 0.005. Applying the formula: M = 20,000 × [0.005 × (1.005)⁶⁰] ÷ [(1.005)⁶⁰ − 1] ≈ $386.66 per month. Total paid over 5 years = $386.66 × 60 = $23,199.60, with $3,199.60 paid in interest.