What affects my monthly payment most?

The interest rate and loan term have the biggest impact on monthly payment amount.

Is a longer loan term better?

It lowers monthly payments but increases total interest paid significantly.

What is amortization?

It is the process of splitting each payment between interest and principal over the loan term.

How to Calculate Loan Payment

A loan payment calculator determines your fixed monthly payment on a personal, auto, or other installment loan. It uses the standard amortization formula.

The Formula

PMT = P[r(1+r)^n] / [(1+r)^n - 1]

Where:

PMTMonthly Payment — Amount paid each month on loan

PPrincipal — Total loan amount borrowed

rMonthly Rate — Annual interest rate divided by 12

nTotal Payments — Number of monthly payments total

Step-by-Step Example

Here's how to calculate loan payment step by step:

1Gather loan terms: Note the principal amount, annual interest rate, and loan term.
2Convert to monthly: Divide the annual rate by 12 and multiply years by 12.
3Apply the formula: Plug in values to calculate the fixed monthly payment.
4Check total cost: Multiply monthly payment by number of payments to see total repayment.

Following these 4 steps gives you the final loan payment value.

Skip the Math

A $20,000 car loan at 5% for 5 years gives a monthly payment of about $377, with $2,645 in total interest.

Use the Free Calculator

Why You Need This Calculation

Calculating loan payments upfront helps you determine affordability and compare loan offers.

Common Mistakes

Forgetting to convert annual rate to monthly.

Divide the annual rate by 12 before using the formula.

Not including loan fees in total cost.

Add origination fees and closing costs to the principal for true cost.

Ignoring prepayment penalties.

Check your loan terms before making extra payments.