How to use this loan calculator
Enter the amount you want to borrow, the yearly interest rate and the length of the loan in years, then press Calculate. You will see your estimated monthly payment, the total you will pay back and how much of that is interest.
How the monthly payment is calculated
This calculator uses the standard amortization formula for a fixed-rate loan. The yearly rate is divided by 12 to get a monthly rate, and the loan is spread over equal monthly payments. Each payment covers the interest for that month plus part of the original amount.
Example
If you borrow 20,000 at 6.5% for 5 years (60 months), the monthly payment is about 391. Over the whole loan you would pay back about 23,480, which means about 3,480 goes to interest.
Tips to pay less interest
- Choose a shorter term. Monthly payments are higher, but the total interest is much lower.
- Compare rates from several lenders before you sign.
- Make extra payments when you can, so the balance falls faster.
- Improve your credit score before you apply, since it often affects the rate you are offered.
Frequently asked questions
Is this calculator accurate?
It gives a close estimate for fixed-rate loans. Your lender may add fees, insurance or different rounding, so the final figure can differ slightly.
Does a longer loan term save money?
A longer term lowers the monthly payment, but you pay more interest in total.
Can I use it for a car loan or personal loan?
Yes. It works for any loan with a fixed rate and equal monthly payments, such as car, personal or student loans.
This calculator is for information only and is not financial advice.