Total interest
$3,479
Finance · Borrowing
Loan
Loan
calculator
See the monthly payment, the total interest, and the true cost of a loan the moment you enter the amount, rate and term. Built on the standard amortization formula lenders use.
Fixed-rate repayment
principal + interest
—
—
$
%
years
Total paid
$23,479
Payments
60
How loan repayments work
A fixed-rate loan is repaid in equal monthly instalments over a set term. Each payment covers the interest that has built up that month, and whatever is left chips away at the balance you owe. Early on, most of the payment is interest; as the balance shrinks, more of each payment goes to the principal. That process is called amortization.
The amortization formula
M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
Here P is the amount borrowed, r is the monthly interest rate (the annual rate divided by 12, as a decimal), and n is the total number of monthly payments (years × 12).
Worked example
Borrow $20,000 at 6.5% over 5 years:
$20,000 · 6.5% · 5 years
r = 6.5 ÷ 100 ÷ 12 = 0.005417
n = 5 × 12 = 60
Monthly payment = $391.32
Total interest ≈ $3,479
n = 5 × 12 = 60
Monthly payment = $391.32
Total interest ≈ $3,479
Rate versus term
Two levers change the cost. A lower rate reduces both the monthly payment and the total interest. A longer term lowers the monthly payment but raises the total interest, because you're borrowing the money for longer. Stretching a loan to make the monthly number look friendlier can quietly cost thousands more overall — worth seeing both figures side by side, which the calculator does.
What this doesn't include
The result is principal and interest only. Real-world borrowing often adds arrangement fees, insurance, or — for a mortgage — property taxes and escrow. Those vary by lender and product, so treat this as the core repayment rather than a full APR figure. For savings growth rather than borrowing cost, the compound interest calculator is the mirror image of this one.
Common questions
Loan FAQ
A fixed-rate loan uses the amortization formula: M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the amount borrowed, r is the monthly interest rate (annual rate ÷ 12 ÷ 100) and n is the number of monthly payments (years × 12).
A longer term lowers each monthly payment but increases the total interest, because you owe the balance for longer. A shorter term costs more per month but far less overall.
No. It calculates principal and interest only. Arrangement fees, insurance and other charges vary by lender and aren't included, so treat the result as the core repayment, not the full APR cost.
Yes, for the principal-and-interest part. A mortgage uses the same amortization maths. Property taxes, insurance and any escrow are separate and not included here.
With no interest the payment is simply the amount divided by the number of months, and the total interest is zero. The calculator handles this case automatically.