TOOLKnow what a loan really costs
This calculator turns three numbers — the amount you borrow, the annual interest rate, and the length of the loan — into the figures that actually matter: your fixed monthly payment, the total interest you'll pay, and the total cost over the full term. It works for any fixed-rate loan, so you can model a mortgage, car loan, student loan or personal loan with the same tool.
How the payment is worked out
A fully amortizing loan is repaid in equal monthly payments using this formula:
where P is the loan amount, r is the monthly rate (annual rate ÷ 12), and n is the number of payments (years × 12). Early payments go mostly toward interest; later ones mostly toward principal — but the payment itself stays constant.
Using it to make better decisions
- Compare terms — a shorter term raises the monthly payment but slashes total interest.
- Shop rates — even half a percent changes the total cost by a surprising amount over 30 years.
- Set a budget — work backward from a monthly payment you're comfortable with to a loan amount that fits.
Estimates are for planning only and assume a fixed rate with equal monthly payments. They don't include taxes, insurance, fees or variable-rate changes. Confirm exact figures with your lender.
A worked example
Say you borrow $25,000 for a car at 7% APR over 5 years. The monthly rate is 7% ÷ 12 = 0.583%, and there are 60 payments. Plugging those into the amortization formula gives a monthly payment of about $495. Over the full term you'd repay roughly $29,702 — meaning about $4,702 in interest on top of the $25,000 you borrowed.
Change one input and watch the cost move: drop the term to 3 years and the payment rises to about $772, but total interest falls to roughly $2,780. That trade-off — lower payment versus less interest — is the core decision behind almost every loan.
How to pay less over the life of the loan
- Shorten the term if you can afford the higher payment — it's the biggest lever on total interest.
- Improve your rate by shopping lenders and checking your credit; even 0.5% adds up over decades.
- Make extra principal payments — anything above the scheduled amount goes straight to the balance and shortens the loan.
- Put more down to borrow less in the first place.
For specific loan types, use the mortgage calculator (with tax and insurance), the car loan calculator (with trade-in and down payment), or model savings growth with compound interest. For a step-by-step guide, read how to calculate loan payments.
Frequently asked questions
How is a monthly loan payment calculated?
It uses the standard amortization formula: M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12) and n is the number of monthly payments. The result is a fixed payment that pays off the loan over the term.
What is the difference between total interest and total cost?
Total cost is every payment added together over the life of the loan. Total interest is that total cost minus the original loan amount — in other words, what the borrowing itself costs you on top of repaying the principal.
Does this work for mortgages, car loans and personal loans?
Yes. Any fixed-rate, fully amortizing loan uses the same math, so you can model a mortgage, auto loan, student loan or personal loan by entering its amount, rate and term.