Payment Calculator

Q: What is the formula for calculating a loan payment?

The standard payment formula is: Payment = P × i ÷ (1 − (1 + i) −n ) P = the amount you borrow i = the yearly rate divided by the number of payments per year n = the total number of payments Example: $200,000 at 6% for 30 years monthly gives i = 0.005 and n = 360. The payment works out to about $1,199.10 a month.

Q: How much more does a 30-year loan cost than a 15-year loan?

A lot more. Take $200,000 at 6%: 15 years: about $1,688 a month and roughly $103,800 in interest 30 years: about $1,199 a month and roughly $231,700 in interest The longer loan saves about $489 a month but costs over $127,000 more in total interest.

Payment Calculator

Introduction

This Payment Calculator shows what a loan costs you from start to finish. Type in your loan amount, your interest rate, and how long you want to pay. You get your payment per period, your total interest, and the date you finish paying.

You can work it two ways. Pick Fixed Term if you know how many years you want to pay, and the tool finds your payment. Pick Fixed Payments if you know what you can pay each month, and the tool finds how long it will take.

You can also add an extra payment. The calculator shows how much interest you save and how much sooner you are debt free. It works for a car loan, a home loan, a student loan, or a personal loan, and you can pay monthly, every two weeks, or weekly.

Along with your answer, you get a step-by-step math breakdown, a chart that splits principal from interest, and a full amortization schedule. The schedule lists every payment, so you can see how much goes to your balance and how much goes to interest each time.

How to use our Payment Calculator

Enter your loan amount, interest rate, and either your loan term or the payment you can afford. The calculator shows your payment per period, the number of payments, total interest, total cost, your payoff date, and a full amortization schedule.

Mode tabs (Fixed Term or Fixed Payments): Pick "Fixed Term" if you know how long the loan runs and want to find the payment. Pick "Fixed Payments" if you know the payment and want to find how long it takes to pay off the loan.

Loan Amount: Type how much money you are borrowing, like 200,000. Dollar signs and commas are fine.

Annual Interest Rate: Type the yearly rate as a percent, like 6.5. Use the rate from your loan offer.

Loan Term: In Fixed Term mode, type how long the loan lasts and choose Years or Months. The top limit is 50 years.

Desired Payment: In Fixed Payments mode, type the amount you want to pay each period. It must be more than the interest charged each period, or the balance never drops.

Payment Frequency: Choose Monthly, Bi-Weekly, or Weekly. This sets your periodic interest rate and how often payments are made.

Extra Payment: Type any extra amount you plan to add each period. It goes straight to principal and cuts your interest and payoff time. Leave it at 0 if you have none.

Calculate and Reset: Click Calculate to see your results, steps, charts, and schedule. Click Reset to return every field to its starting value.

Schedule view: Choose "Detailed" to see every single payment, or "Annual Summary" to see one row per year.

What a Loan Payment Is

A loan payment is the set amount you pay a lender each period until the loan is gone. Most loans (home loans, car loans, student loans, and personal loans) use the same math. Each payment covers two things: interest (the fee for borrowing) and principal (the money you actually owe).

How Loan Payments Work

Lenders charge interest on the balance you still owe. At the start, your balance is big, so most of your payment goes to interest. As the balance drops, less goes to interest and more goes to principal. This slow shift is called amortization. Your payment stays the same, but the split inside it changes every period.

The Parts of a Loan

Loan amount (principal): the money you borrow.
Interest rate: the yearly rate the lender charges, shown as a percent.
Loan term: how long you have to pay it back, in years or months.
Payment frequency: how often you pay (weekly, every two weeks, or monthly).
Extra payment: any added money that goes straight to the principal.

Two Ways to Look at a Loan

You can start with a fixed term and find out what the payment will be. Or you can start with a fixed payment you can afford and find out how long the loan will last. Both paths use the same loan math, just solved in different directions.

Why Term Length Matters

A longer term lowers your payment but raises the total interest you pay. A shorter term costs more each period but saves a lot of money overall. For example, a $200,000 loan at 6% costs about $103,788 in interest over 15 years. Stretch it to 30 years and the interest more than doubles.

How Extra Payments Help

Extra money goes only to the principal. A smaller balance means less interest is charged next period, so the loan shrinks faster. Even a small extra amount each month can cut years off the loan and save thousands in interest. Check with your lender first to make sure there is no early payoff penalty.

Paying More Often

Paying weekly or every two weeks instead of monthly means you make a few more payments each year and the balance drops sooner. That trims both the payoff time and the total interest cost.

Reading an Amortization Schedule

An amortization schedule lists every payment, the date, how much goes to interest, how much goes to principal, and the balance left. It shows exactly where your money goes and when the loan hits zero. Watching the principal column grow over time is the clearest picture of your progress.

Formulas used

Periodic interest rate

i = \frac{r/100}{m}

Number of scheduled payments (fixed term)

N = \frac{T_{\text{months}}}{12} \times m

Payment per period (amortizing loan)

PMT = \frac{P \times i}{1 - (1+i)^{-N}}

Payment per period at 0% interest

PMT = \frac{P}{N}

Number of payments for a given payment amount

N = \frac{-\ln\!\left(1 - \dfrac{P \times i}{PMT}\right)}{\ln(1+i)}

Per-period amortization split and ending balance

I_k = B_{k-1} \times i,\quad PR_k = PMT - I_k,\quad B_k = B_{k-1} - PR_k - E

Total interest and total amount paid

\text{Interest} = \sum_{k=1}^{N} I_k,\quad \text{Total Paid} = P + \text{Interest}

Interest as a percentage of total cost

\text{Interest \%} = \frac{\text{Total Interest}}{\text{Total Paid}} \times 100

Frequently asked questions

What is the formula for calculating a loan payment?

The standard payment formula is:

Payment = P × i ÷ (1 − (1 + i)⁻ⁿ)

P = the amount you borrow
i = the yearly rate divided by the number of payments per year
n = the total number of payments

Example: $200,000 at 6% for 30 years monthly gives i = 0.005 and n = 360. The payment works out to about $1,199.10 a month.

Why does most of my loan payment go to interest at first?

Interest is charged on the balance you still owe. Early on, that balance is at its biggest, so the interest part is big too.

On a $200,000 loan at 6%, the first month's interest is $1,000. If the payment is $1,199.10, only $199.10 goes to the balance. As the balance falls, the interest shrinks and more of each payment pays down principal.

Is it better to pay a loan biweekly or monthly?

Biweekly usually costs you less. You pay half the monthly amount every two weeks, which is 26 half payments a year. That equals 13 full payments instead of 12.

The extra payment each year cuts the balance faster and lowers total interest. Ask your lender to apply the money right away, not hold it until a full monthly payment builds up.

How much can one extra payment a year save?

On a typical 30-year home loan, one extra full payment each year can cut about four to five years off the term and save tens of thousands in interest.

The saving comes from a smaller balance. Less balance means less interest charged every month after that, so the effect builds over time.

Does paying extra on a loan lower my monthly payment?

Usually no. Extra money goes to the principal, so the loan ends sooner, but the required payment stays the same.

Some lenders offer a "recast," where they redo the math on your lower balance and give you a smaller payment for the same end date. You have to ask for it, and there is often a fee.

What is the difference between APR and interest rate?

The interest rate is just the cost of borrowing the money. The APR adds lender fees and closing costs on top, spread across the loan term.

APR is the better number for comparing two loan offers. But payment math uses the plain interest rate, not the APR.

What is a prepayment penalty?

It is a fee some lenders charge if you pay your loan off early or pay a large amount ahead of schedule. It protects the lender's expected interest.

Check your loan papers before you make big extra payments. Most home loans in the U.S. no longer have them, but some car loans and personal loans still do.

How much more does a 30-year loan cost than a 15-year loan?

A lot more. Take $200,000 at 6%:

15 years: about $1,688 a month and roughly $103,800 in interest
30 years: about $1,199 a month and roughly $231,700 in interest

The longer loan saves about $489 a month but costs over $127,000 more in total interest.

What happens if my payment is smaller than the interest charged?

The balance grows instead of shrinking. This is called negative amortization.

If a $200,000 loan at 6% charges $1,000 of interest a month and you pay only $900, the unpaid $100 gets added to what you owe. You would never pay the loan off. Your payment must always beat the interest for that period.

Does paying off a loan early hurt your credit score?

It can dip your score a few points for a short time. Closing an installment loan shortens your mix of active accounts and can lower your average account age.

The drop is small and short lived. Saving real interest money is worth more than a few temporary points.

What is the difference between a simple interest loan and an amortized loan?

Most amortized loans charge interest on the balance each period using a set schedule. Simple interest loans charge interest on the balance each day.

With daily simple interest, paying a few days early saves you a little money. With a normal amortized loan, the interest for the period is set no matter which day you pay.

How much of my income should go to loan payments?

A common guide is the 28/36 rule. Keep housing payments at or under 28% of your gross monthly income, and all debt payments (housing, car, student, credit cards) at or under 36%.

So with $6,000 a month before taxes, aim for housing under $1,680 and all debt under $2,160.

What is a balloon payment?

It is one large payment due at the end of some loans. The regular payments are small because they are based on a long schedule, but the loan ends early and the rest comes due at once.

Balloon loans keep payments low at first, but you need a plan to pay or refinance the lump sum when it hits.

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