Simple loan payment calculator
Enter a single loan balance, a fixed annual interest rate, and a repayment term. The result is a level monthly payment that would retire the balance in that many years, plus the interest sum implied by that schedule—useful for auto loans, personal loans, and back-of-napkin comparisons before you read the real note.
Your loan
Result
Monthly payment (estimate)
$0.00
- Total repaid (principal + interest)
- —
- Total interest
- —
This is the fixed-rate, equal-payment, fully amortizing case. Fees, insurance, and odd-day interest at closing are not modeled.
The math a payment calculator is quietly doing
A fully amortizing installment loan is designed so that, if you pay the same amount every month, the outstanding balance reaches zero on the last day of the last period. The interest charge each month is usually computed on the balance that is still on the books at the start of that month (or a similar day count that your promissory note specifies). The rest of the payment, after interest is taken out, is applied to the principal, which in turn means the next month’s interest is a little bit smaller, and a little more of the next payment is principal. The closed-form expression you see implemented here solves for the one payment that makes that self-reinforcing process land exactly on zero when you know the interest rate, the number of months, and the initial balance.
That expression is a compact way to get the payment without simulating all the months, but a bank’s core processing system is still going to round cents and may handle weekends and legal holidays, so a penny or two of drift is normal. If the annual rate in your contract is compounded on a different schedule from monthly, the effective monthly rate in this tool may not be identical, though most consumer term loans in the U.S. are close enough to the monthly compounding model that a generic calculator is still instructive. When a dealer talks about a “biweekly” plan that shaves time off a car loan, that is a different pattern again—extra money leaves your pocket earlier in the year, so the average balance is lower and you pay less interest. This page does not model biweekly, interest-only, or balloon structures unless you re-run a separate thought experiment and combine the pieces yourself.
Everyday use cases the simple version still serves well
Shoppers use a PMT model to compare a five-year and a six-year car loan, or a three-year and a five-year personal loan, before they are emotionally attached to a specific payment. Small-business owners use it to test whether a fixed monthly debt service fits a conservative cash flow forecast when they are considering equipment financing, understanding that covenants and origination costs sit outside the pure payment line. On the teaching side, the level-payment case is a favorite bridge between a spreadsheet and algebra class: the formula is a concrete application of exponents, and a student can verify the first few rows of a schedule by hand. When the numbers in this box match a lender’s app within a couple of dollars, you have a useful sanity check; when they diverge wildly, it is a signal to re-read the contract, not a reason to distrust exponents.
Frequently asked questions
- Is this the same payment formula banks use for fixed loans?
- The monthly payment for a level-payment, fixed-rate, fully amortizing loan follows the same annuity (present value) math that underlies most consumer term loans. Lenders will still round, post payments on business days, and may handle first partial periods or fees outside this simple form.
- What does the annual interest rate field represent?
- Enter the note rate as a yearly figure with no percent sign, such as 7.25 for 7.25 percent. The program divides by twelve to get a monthly rate for the standard formula. It is not a substitute for the APR, which can include other finance charges in its definition.
- Can I use this for credit cards or lines of credit?
- Revolving accounts usually have a different payment rule from a level amortizing term loan, so a simple PMT model like this one is a weak fit. It is most appropriate for installment loans, including auto, personal, and some student loans, when you are assuming the same payment every month until the balance is zero.
- Why is total interest not shown as a simple percentage of principal?
- Total interest is the sum of the interest part of all scheduled payments. You can think of it as the difference between the sum of those payments and the original principal in this fixed-rate, equal-payment case.
- When should I use the mortgage calculator instead?
- If you are modeling a home purchase with a down payment, escrow, insurance, and PMI, the mortgage page breaks those out and produces an amortization table. This loan calculator stays narrow: one amount, one rate, one term, one regular payment number.