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How to use the loan calculator
Enter the amount you want to borrow, the yearly interest rate and the length of the loan in years. The calculator shows the monthly payment, the total you will pay back, the interest included in that total and the number of payments.
How the payment is calculated
The calculator uses the standard formula for a fixed-rate loan repaid in equal monthly payments:
payment = P × r ÷ (1 − (1 + r)^−n)
Here P is the amount borrowed, r is the monthly interest rate (the yearly rate divided by 12, as a decimal) and n is the number of monthly payments.
Example: $25,000 at 6.5% over 5 years. That is 60 payments at about 0.54% a month. The payment is roughly $489 a month, which adds up to about $29,350 in total, so the interest is roughly $4,350.
What changes the payment
- A longer term lowers the monthly payment but raises the total interest, because you borrow for longer.
- A higher rate raises both the monthly payment and the total interest.
- A larger deposit or down payment reduces the amount borrowed, which lowers both.
- Extra payments reduce the balance sooner, so less interest builds up. The calculator does not model them, so check your lender’s schedule.
What the calculator leaves out
The result covers repayment of the loan at a fixed rate only. It does not include arrangement fees, insurance, taxes, early repayment charges or variable rates. Those can change the real cost, so compare the total cost of each offer, not only the monthly payment.
Questions about loans
What is APR?
The annual percentage rate is the yearly cost of borrowing, usually including some fees, expressed as a percentage. The interest rate is the cost of the money itself. For a loan with no fees, the two are the same.
Can I use this for a mortgage?
Yes, for a basic estimate of a fixed-rate mortgage. Mortgages often add fees, insurance and taxes, and many have variable rates, so the real cost will be higher than the calculator shows.
Does paying a little extra each month help?
Yes. Extra payments reduce the balance faster, so less interest accrues. Ask your lender whether there is an early repayment charge before you start.