How to Use This Calculator
- 1
Enter Loan Amount
Input the total principal sum you want to borrow.
- 2
Specify Loan Term
Enter the number of years over which you'll repay the loan.
- 3
Enter Interest Rate
Provide the annual percentage rate (APR) charged by the lender.
- 4
Expand Advanced Options (Optional)
Switch payment method (Equal Principal or Bullet Payment), set a grace period, add extra monthly payments to pay off faster, or enter your gross income to check your debt-to-income ratio.
- 5
Review Your Results
The calculator displays your Monthly Payment, Total Interest, Total Amount, Payoff Date, and Interest-to-Principal ratio, plus an amortization chart, payoff milestones, and a detailed schedule you can export as CSV.
Example Calculation
A homebuyer is evaluating a 10-year mortgage to understand the monthly payment and total cost.
Loan Amount ($)
100,000
Loan Term (years)
10
Interest Rate (%)
5
Results
Monthly Payment
$1,060.66
Total Interest
$27,278.62
Total Amount
$127,278.62
Payoff Date
July 2036
Interest-to-Principal
27.3%
Tips
Use Extra Payments to Save Thousands
Adding $100/month extra on a $100,000 loan at 5% over 10 years saves over $3,100 in interest and pays off 13 months early. Use the Extra Monthly Payment field under Advanced Options to see your savings.
Compare Scenarios Before Committing
Use the Compare Another Scenario button below your results to see how different rates or terms affect your total cost side by side.
Check Your Affordability
Enter your monthly gross income under Advanced Options to see your debt-to-income ratio. Lenders typically prefer a DTI below 36% for loan approval.
Download Your Amortization Schedule
Click the CSV button in the amortization table header to export your full payment schedule — useful for budgeting or sharing with a financial advisor.
Understanding Loan Payments and Total Cost
A loan is one of the largest financial commitments most people make.
Whether it's a mortgage, car loan, or personal loan, understanding exactly what you'll pay — monthly and in total — is essential before signing.
This Loan Calculator shows your monthly payment, total interest, amortization schedule, and payoff timeline instantly.
For example, a $100,000 loan at 5% over 10 years requires monthly payments of $1,060.66, with $27,278.62 going to interest — meaning you pay back $1.27 for every $1 borrowed.
The Amortization Formula
This calculator uses the standard amortization formula for equal monthly payments:
Monthly Payment = P x r / (1 - (1 + r)^-n)
Where:
P= Loan Amount (principal)r= Monthly interest rate (Annual Rate / 12 / 100)n= Total number of monthly payments (Term in years x 12)
For Equal Principal payments, the principal portion is fixed at P / n each month, and interest is calculated on the remaining balance:
Monthly Payment = (P / n) + (Remaining Balance x r)
For Bullet Payment, you pay only interest each month (P x r) and repay the full principal in the final month.
Worked Example: 10-Year Mortgage
A homebuyer borrows $100,000 at 5% annual interest over 10 years, with no grace period, using equal monthly payments.
- Total months: 10 years x 12 = 120 months
- Monthly rate: 5% / 12 / 100 = 0.0041667
- Monthly payment:
$100,000 x 0.0041667 / (1 - (1.0041667)^-120)= $416.67 / (1 - 0.60716)= $416.67 / 0.39284= $1,060.66 - Total paid: $1,060.66 x 120 = $127,278.62
- Total interest: $127,278.62 - $100,000 = $27,278.62
- Interest-to-principal ratio: 27.3% — meaning for every $1 borrowed, $0.27 goes to interest
The payoff milestones: 25% of the principal is paid off by month 37, 50% by month 68, 75% by month 96, and 100% by month 120.
How Extra Payments Accelerate Payoff
One of the most powerful strategies for reducing loan cost is making extra payments toward principal.
On the same $100,000 loan at 5% over 10 years, adding $200/month extra reduces the payoff time to 97 months (saving 23 months) and saves approximately $5,625 in interest.
The calculator's Extra Monthly Payment feature shows you exactly how much you'd save for any amount.
Choosing the Right Payment Method
The three payment methods serve different needs:
- Equal Payment & Interest is the most common — predictable monthly payments make budgeting easy. Best for most borrowers.
- Equal Principal means higher payments at the start that decrease over time. You pay less total interest because the principal reduces faster. Good if your income is high now.
- Bullet Payment keeps monthly costs low (interest only) but requires a large lump sum at the end. Common in business lending or bridge loans.
The History of Loan Amortization
The concept of amortization — gradually repaying debt through regular installments — evolved from medieval debt contracts into the systematic framework used today.
Early loans often used bullet payments, where only interest was paid periodically with the full principal due at the end.
Fully amortizing loans became widespread in the 20th century through government-backed mortgage programs, making homeownership accessible through predictable monthly payments rather than prohibitive lump sums.
Frequently Asked Questions
How is loan interest calculated?
Most loans use amortization, where each payment covers both interest and principal. Early payments are mostly interest, with more going toward principal over time. The interest portion is calculated on the remaining balance each period.
What is APR vs. interest rate?
The interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus other fees and costs, giving a more complete picture of the total borrowing cost. Always compare loans using APR.
How can I pay off my loan faster?
You can pay off a loan faster by making extra payments toward the principal, switching to bi-weekly payments instead of monthly, or refinancing to a shorter term. Even rounding up your monthly payment can save significant interest over time.