Payment Calculator
Payment Calculator
The Payment Calculator computes the periodic payment required to amortize a loan, or conversely determines the loan amount supported by a given payment. This is useful for anyone evaluating mortgages, car loans, personal loans, or installment debt. Understanding the relationship between loan amount, rate, term, and payment is fundamental to informed borrowing.
The mathematics behind loan payments is based on annuities. When you take out a loan, you receive a lump sum today in exchange for future payments. The lender calculates payments so the present value of all future payments equals the loan amount at the given interest rate.
Payment frequency affects total interest. More frequent payments reduce interest because the balance declines faster. Switching from monthly to biweekly payments effectively makes one extra monthly payment per year, saving thousands in interest over the loan term.
Choose whether to solve for payment (PMT) given a known loan amount, or solve for loan principal (PV) given a known payment. For payment mode, enter the loan principal, annual interest rate, term, and payment frequency. For principal mode, enter the desired payment instead.
Optionally enter extra recurring payments to see how much faster you can pay off the loan and how much interest you save. For example, a $30,000 car loan at 6 percent over 5 years has a $580 monthly payment. Paying $650 per month saves about $1,200 in interest and pays off the loan 10 months early.
The calculator supports weekly, biweekly, monthly, quarterly, and annual payment frequencies. Choose the one that matches your loan structure.
The standard loan payment formula calculates the fixed payment to fully amortize a loan:
To solve for the loan principal given a known payment:
Total interest equals total payments minus original principal:
Monthly payments and total interest for different loan scenarios:
| Loan Amount | Rate | Term | Monthly Payment | Total Interest |
|---|---|---|---|---|
| $20,000 | 5.0% | 3 yr | $599 | $1,564 |
| $20,000 | 6.0% | 5 yr | $387 | $3,220 |
| $30,000 | 6.0% | 5 yr | $580 | $4,800 |
| $50,000 | 6.0% | 5 yr | $967 | $8,020 |
| $50,000 | 6.0% | 10 yr | $555 | $16,600 |
Always compare APR rather than the nominal interest rate. APR includes fees and other borrowing costs, providing a more complete picture. Lenders must disclose APR by law.
Consider total interest cost when choosing a loan term. A longer term means lower payments but much more interest. Choose the shortest term you can afford.
If possible, make extra payments toward principal. Even occasional extra payments significantly reduce total interest and shorten the loan term.
This calculator assumes a fixed interest rate. Adjustable-rate loans cannot be accurately modeled. Fees and closing costs are not included; compare APRs to account for these.
Balloon payments, interest-only periods, and other non-standard loan structures are not modeled. For these loans, consult with your lender or a financial professional.
- How does loan term affect my payment?
- Longer term = lower monthly payment but more total interest. Shorter term = higher payment but drastically less interest.
- What is the difference between principal and total interest?
- Principal is the original amount borrowed. Total interest is the sum of all interest charges over the full loan term.
- What is an amortization schedule?
- Full table of every payment showing interest portion, principal portion, and remaining balance after each.
- How do extra payments affect my loan?
- Extra payments directly reduce principal, decreasing total interest and shortening the term.
- What factors determine my monthly payment?
- Three main factors: principal, interest rate, and loan term. Payment frequency also matters.
- Consumer Financial Protection Bureau. "What Is the True Cost of Borrowing?" consumerfinance.gov.
- Federal Reserve Board. "Consumer Handbook on ARMs." federalreserve.gov.
- Investopedia. "Calculating Loan Payments and Costs." investopedia.com.
- Bankrate. "Loan Payment Calculator." bankrate.com.
- NerdWallet. "How to Compare Loan Offers." nerdwallet.com.
Last updated: May 12, 2026