How this loan calculator works
A standard loan is amortized: you pay the same fixed amount every month, but the split between interest and principal changes over time. Early on, most of each payment is interest because your balance — and therefore the interest charged on it — is still high. As the balance falls, more of every payment chips away at the principal, so the loan pays down faster toward the end.
The fixed monthly payment comes from the amortizing-payment formula:
M = P · r ÷ ( 1 − (1 + r)−n )
where P = loan amount, r = annual rate ÷ 12, and n = years × 12 (the number of monthly payments).
where P = loan amount, r = annual rate ÷ 12, and n = years × 12 (the number of monthly payments).
Any extra payment goes entirely to principal, so you stop paying interest on that amount for the rest of the loan. Even a small recurring extra can shave months — sometimes years — off the term. Full assumptions are on our methodology page. This calculator is for education, not advice.
Frequently asked questions
- How is my monthly loan payment calculated?
- We use the standard amortizing-payment formula M = P·r / (1 − (1 + r)−n), where P is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments. Each payment covers that month's interest first, and the rest reduces your balance.
- How does making extra payments help?
- Any extra amount you pay goes straight to the principal, so you owe interest on a smaller balance every month after that. This shortens the term and can save a large amount of total interest. Enter an extra monthly amount to see your new payoff time.
- Does this calculator store my numbers?
- No. Everything runs in your browser. Nothing you type is uploaded or saved on a server.