Loan Payment Calculator

A good fit for fixed loans, a poor one for cards

Use this page for loans with a fixed rate and a fixed number of payments: a car loan, a personal loan, or a standard amortizing mortgage. Those products are designed around one number — the monthly payment — and this calculator derives it from the amount, rate and term, then shows where the money goes year by year.

It is the wrong tool for credit cards, which have no fixed end date and calc interest daily on a floating balance. For a card you are clearing with a chosen monthly payment, use the Credit Card Payoff Calculator. Variable-rate loans are also a poor fit beyond the current rate: run the calculation at several rates instead of trusting one guess. And if your real question is "how much may I borrow?", the answer lives in the Loan Affordability Calculator, which runs this maths in reverse.

A worked example, step by step

Problem: a car loan of 20,000 at 5.9% for five years. What is the monthly payment?

1. Convert the annual rate to a monthly one: 5.9 ÷ 12 = 0.49167% per month (0.0049167).
2. Count the payments: five years = 60 monthly payments.
3. Apply the amortising formula: payment = 20,000 × 0.0049167 ÷ (1 − 1.0049167⁻⁶⁰).
4. The discount factor 1 − (1.0049167)⁻⁶⁰ works out to about 0.25492.
5. Payment ≈ 98.33 ÷ 0.25492 ≈ 385.73 per month.

Total repaid: 60 × 385.73 = about 23,143.60, so the interest is roughly 3,143.60 — about 16% of what you borrowed. A quick sanity check: the balance averages a little over 10,000 across the five years, and 5.9% a year on that ballpark times five years lands near 3,000, which matches.

Monthly payment for a 10,000 loan at 6%

The term is the lever people underestimate. Same loan, same rate, only the length changes:

Halving the term does not double the payment — but it slashes interest dramatically, because the balance falls much faster.

Mistakes that hide the real cost

• Shopping by payment alone. A dealer can make any loan "affordable" by stretching the term. Always compare the total repaid too.
• Ignoring fees inside the price. A "0% interest" offer often carries an upfront fee. Convert everything to an annual cost before comparing.
• Assuming extra payments recalculate automatically. Many lenders keep the same payment and simply shorten the schedule; ask how overpayments are applied.
• Testing only the quoted rate. Rates move. Run the calculator at your rate and at one or two points higher to see whether the payment still fits.
• Forgetting that interest is front-loaded. Early payments are mostly interest, so refinancing or clearing a loan early matters most in the first years.

Keep exploring

• Mortgage Calculator — the same maths with a property price and down payment.
• Loan Affordability Calculator — borrowing limit behind a monthly payment.
• Simple Interest Calculator — flat interest that never compounds.
• Guide: How Loan Payments Work.