What will my loan payment be?
Find the payment on a fixed-rate loan, how much interest it costs, and how the balance falls each year.
- Your payment
- $495.03
A $25,000.00 loan at 7% over 5 years is repaid with 60 payments of $495.03, costing $4,701.80 in interest.
- Number of payments
- 60
- Loan amount
- $25,000.00
- Total interest
- $4,701.80
- Total of payments
- $29,701.80
- Rate per payment
- 0.5833%
- Effective yearly rate
- 7.229%
- Years
- 5
Your payment: $495.03. A $25,000.00 loan at 7% over 5 years is repaid with 60 payments of $495.03, costing $4,701.80 in interest.
How much of what you repay is interest?
Where does each year of payments go?
What does each year of the loan look like?
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes the level payment, total interest, and yearly schedule of a fixed-rate loan for any payment frequency and compounding.
Example with the default inputs (Loan amount $25,000.00, Interest rate 7%, Loan term (years) 5, Payments Monthly, Interest compounds Monthly): A $25,000.00 loan at 7% over 5 years is repaid with 60 payments of $495.03, costing $4,701.80 in interest.
Method: payment = L × i ÷ (1 − (1 + i)^−n), with L the loan, n = round(years × payments a year), and i = (1 + r/m)^(m/p) − 1 the rate per payment for a yearly rate r compounded m times a year and p payments a year.
- The rate is fixed for the whole loan.
- Payments are equal and made at the end of each payment period.
- Interest for each payment period is the balance times the rate per payment.
- The number of payments is the term in years times the payments a year, rounded to a whole number.
- The last payment is whatever is left; values are not rounded to the cent between payments.
Worked examples
Each example is checked against the calculator on every build.
- Loan amount $20,000.00, Interest rate 7%, Loan term (years) 5, Payments Monthly, Interest compounds Monthly gives Your payment $396.02, Total interest $3,761.44, Number of payments 60, Effective yearly rate 7.229008%.Source: hand calculation in content.mdx; Python 3 cross-check in docs/progress/WP-31/python/loan.py
- Loan amount $20,000.00, Interest rate 7%, Loan term (years) 5, Payments Every two weeks, Interest compounds Monthly gives Your payment $182.49, Number of payments 130, Total interest $3,724.23.Source: hand calculation in content.mdx: rate per payment (1 + 0.07/12)^(12/26) − 1
- Loan amount $10,000.00, Interest rate 6%, Loan term (years) 3, Payments Quarterly, Interest compounds Quarterly gives Your payment $916.80, Number of payments 12, Rate per payment 1.5%, Total interest $1,001.60.Source: hand calculation in content.mdx: 10,000 × 0.015 ÷ (1 − 1.015^−12)
- Loan amount $12,000.00, Interest rate 0%, Loan term (years) 2.5, Payments Weekly, Interest compounds Daily gives Your payment $92.31, Number of payments 130, Total interest $0.00.Source: hand calculation in content.mdx: 12,000 ÷ 130
How it works
Write r for the yearly interest rate as a decimal, m for the number of times interest compounds each year (365, 12, 4, 2, or 1), and p for the number of payments a year (12, 24, 26, 52, 4, or 1).
- Rate per payment: i = (1 + r/m)^(m/p) − 1. When m = p this is simply r ÷ p. At 0% it is 0.
- Number of payments: n = years × p, rounded to the nearest whole number. The loan needs at least one payment.
- Payment: payment = L × i ÷ (1 − (1 + i)^−n), where L is the loan amount. At 0% the payment is L ÷ n.
- Schedule: for each payment, interest = balance × i, and the rest of the payment lowers the balance. The last payment (number n) pays whatever balance is left, so the principal parts add up to exactly L.
- Rows: each row of the table is one loan year: payments 1 to p are year 1, payments p + 1 to 2p are year 2, and so on. The last year may have fewer payments.
- Totals: total interest is the sum of the interest on every payment, which equals n × payment − L exactly because the last payment pays what is left; total of payments is L plus the total interest. The effective yearly rate is (1 + i)^p − 1.
Assumptions
- The rate is fixed for the whole loan.
- Payments are equal and made at the end of each payment period.
- There are no fees; the APR of a loan with fees is higher than its interest rate.
- Values are not rounded to the cent between payments; only the display is rounded.
Worked examples by hand
$20,000 at 7% over 5 years, monthly payments, monthly compounding. i = 0.07 ÷ 12 = 0.0058333 and n = 60. (1 + i)^−60 = 0.705405, so the payment is 20,000 × 0.0058333 ÷ (1 − 0.705405) = $396.02. Sixty payments total $23,761.44, so the interest is $3,761.44. The effective yearly rate is 1.0058333^12 − 1 = 7.229%.
The same loan paid every two weeks. i = (1 + 0.07/12)^(12/26) − 1 = 0.0026881 and n = 5 × 26 = 130. (1 + i)^−130 = 0.705405, so the payment is 20,000 × 0.0026881 ÷ (1 − 0.705405) = $182.49. Running the schedule, the interest adds up to $3,724.23.
$10,000 at 6% over 3 years, quarterly payments, quarterly compounding. i = 0.06 ÷ 4 = 0.015 (1.5% per payment) and n = 12. 1.015^−12 = 0.836387, so the payment is 10,000 × 0.015 ÷ (1 − 0.836387) = $916.80. The interest is 12 × 916.80 − 10,000 = $1,001.60.
$12,000 at 0% over 2.5 years, weekly payments. n = 2.5 × 52 = 130 and there is no interest, so the payment is 12,000 ÷ 130 = $92.31.
Other questions people ask
How is a loan payment calculated?
A fixed-rate loan is repaid in equal payments. Each payment is L × i ÷ (1 − (1 + i)^−n), where L is the amount borrowed, i is the interest rate for one payment period, and n is the number of payments. For $20,000 at 7% over 5 years, paid monthly, i = 0.07 ÷ 12 and n = 60, so the payment is $396.02.
What does the compounding choice change?
It sets how the yearly rate turns into a rate per payment. If interest compounds as often as you pay (monthly with monthly payments), the rate per payment is the yearly rate divided by the payments a year. If it compounds on a different schedule, the page uses the equivalent rate (1 + r/m)^(m/p) − 1. Most US consumer loans quote a rate that compounds monthly, which is the default.
Do payments every two weeks save money?
Paying every two weeks over the same term means 26 smaller payments a year instead of 12. The money reaches the lender a little sooner, so the interest is a little lower: $20,000 at 7% over 5 years costs $3,761.44 of interest paid monthly and $3,724.23 paid every two weeks. The bigger saving in "biweekly" plans comes from the 13th monthly payment they add each year, which the amortization calculator can show as an extra yearly payment.
What is the effective yearly rate?
It is the rate you really pay in a year once compounding is counted: (1 + rate per payment)^(payments a year) − 1. A 7% rate compounded monthly is an effective 7.229% a year. It lets you compare loans that compound differently.
What is the difference between the interest rate and the APR?
The interest rate is the cost of borrowing the money. The APR (annual percentage rate) also counts fees such as origination fees, so it is usually higher. This page works from the interest rate. To see how a fee changes the APR, use the personal loan or business loan calculator.
Can the loan term be a fraction of a year?
Yes. Type 2.5 for two and a half years. The page multiplies the years by the payments a year and rounds to a whole number of payments, so 2.5 years of weekly payments is 130 payments.