How the payment is worked out
A fixed-rate installment loan is designed so that the same payment, made every month, drives the balance to exactly zero by the end of the term. The calculator solves the standard amortization formula for that single number using your loan amount, interest rate and number of months.
Within each payment, the lender first takes the interest due on the outstanding balance for that month, and the remainder reduces the principal. Because the balance starts high, early payments are interest-heavy; as the balance falls, more of each payment goes toward principal.
What the results mean
The monthly payment is the fixed amount you owe each month. Total interest is everything you pay above the original loan amount, and total paid is the loan plus that interest combined.
The donut chart contrasts the principal — the money you borrowed — with the interest you pay for the privilege. The longer the term or the higher the rate, the larger the interest slice grows.
Trimming the cost
The total interest is sensitive to a few choices:
- A shorter term raises the monthly payment but sharply cuts total interest.
- Even small extra payments toward principal shorten the loan and reduce interest.
- A lower rate, whether from better credit or shopping around, lowers both the payment and the lifetime cost.
Scope of this estimate
This tool models principal and interest for a standard fixed-rate loan. It does not include fees, insurance, taxes, or the effects of variable rates. Use it for planning and comparison, and confirm exact figures with your lender.
Formula
r = annualRate/100/12; payment = P·r / (1 − (1+r)⁻ⁿ)Frequently asked questions
- What happens at 0% interest?
- With no interest the payment is simply the loan amount divided by the number of months.