The formula
How it works
Find the monthly payment on a loan, or how long it takes to pay one off. Pick which you want to solve for, then enter the loan amount, interest rate, and either the term or the payment.
FAQ
Which should I solve for?
Choose “Monthly payment” when you know the term and want the payment; choose “Payoff time” when you know what you can pay each month and want to see how long it takes. The calculator switches the inputs to match your choice.
Why can a payment never pay off the loan?
If the monthly payment is smaller than the interest charged each month, the balance grows instead of shrinking and the loan is never repaid. In payoff-time mode the calculator flags this so you know the payment needs to be higher.
Does a longer term always mean a lower payment?
Yes — stretching the same loan amount over more months lowers each payment, but it also means paying interest for longer, so the total interest cost rises. A shorter term raises the payment but usually saves money overall.
How much of my payment goes to interest versus principal?
Early payments are weighted more toward interest because it is charged on the full remaining balance; as the balance shrinks, more of each payment chips away at principal. The breakdown below the result shows the total split for the whole loan.
What is the difference between the interest rate and APR?
The interest rate used here is the rate charged on the outstanding balance, while APR also folds in fees like origination charges, making it the better number for comparing loan offers. This calculator uses the plain interest rate, not APR.
Why is the monthly rate the annual rate divided by 12?
Loans that compound monthly charge one twelfth of the annual rate each period, which is why the formula divides the annual rate by 12 to get \(i\). If a loan compounds differently, the monthly figure would need to be adjusted accordingly.
How does an extra payment change the payoff time?
Any amount paid above the required payment goes straight to principal, which reduces the interest charged in every following month. Even a modest, consistent extra payment can shorten the payoff time by months or years.
About the payment calculator
This calculator answers the two questions most people have about a loan: what will the monthly payment be, and how long will it take to clear? It works either way round — give it a term and it returns the payment, or give it a payment and it returns the number of months. Behind both is the standard amortization formula that banks use to schedule repayments.
How to use it
Choose whether to solve for the monthly payment or the payoff time. Enter the loan amount and the annual interest rate, then either the term in years or the amount you can pay each month. For example, a $20,000 loan at 6% over 5 years costs about $387 a month; paying $400 a month instead clears it a little sooner and saves some interest.
The formula
The monthly payment is , where is the loan amount, the monthly rate (annual rate ÷ 12) and the number of payments. Solving the same equation for gives the payoff time, . This assumes a fixed rate and equal monthly payments.
Where it is used
Borrowers use it before taking out a car loan, personal loan or any fixed instalment credit, to check the payment fits their budget or to see how a bigger payment shortens the term. Lenders and brokers use the same maths to quote terms. Because it works in both directions, it is equally useful for planning a payment around a target term or a term around a target payment.