How the calculation works
A fixed-rate loan with equal payments is called an amortizing loan. Each month the lender charges interest on the balance you still owe. The rest of your payment reduces the balance. Because the balance falls, the interest part shrinks every month and the principal part grows.
i = r / 12
Payment = L × i / (1 − (1 + i)−n)
L = loan amount · r = yearly interest rate as a decimal · i = monthly rate · n = number of monthly payments. With a 0% rate the payment is L / n.Worked example
Borrow 25,000 at 7.5% a year for 5 years (n = 60).
- Monthly rate: i = 0.075 / 12 = 0.00625.
- Discount factor: (1 + i)−60 = 0.68809.
- Payment: 25,000 × 0.00625 / (1 − 0.68809) = 500.95 a month.
- Total paid: 500.95 × 60 = 30,056.92, of which 5,056.92 is interest.
- First month: interest is 25,000 × 0.00625 = 156.25, so 344.70 goes to the balance.
Extra payments
An extra amount is added to every monthly payment and goes straight to the balance. The calculator then runs the schedule month by month until the balance reaches zero, and compares it with the standard schedule. In the example, paying 100 extra a month clears the loan about 11 months sooner.
What this calculator does not include
- Fees, insurance and penalties for early repayment. Check your loan agreement before paying extra.
- Variable rates. The rate is assumed to stay the same for the whole term.
- Payment schedules other than monthly.
Amounts are rounded for display only; the calculation itself is not rounded. Results are estimates for information, not financial advice. Last updated: 12 November 2026.
Frequently asked questions
What is an amortization schedule?
It is a table that splits every payment into interest and principal and shows the balance left after each payment. Early payments are mostly interest; later payments are mostly principal.
How do extra payments save money?
An extra payment lowers the balance straight away. Interest is charged on the balance, so every later month costs less interest and the loan ends sooner.
Is the interest rate the same as the APR?
Not always. The APR also includes fees and other costs. Enter the interest rate here; if you only know the APR and the loan has fees, the real payment can differ a little.
Why does my lender show a slightly different payment?
Lenders can round payments, count days differently or add fees and insurance. This calculator charges one twelfth of the yearly rate each month on the remaining balance.
Can I use this for a car loan or a personal loan?
Yes. It works for any loan with a fixed rate and equal monthly payments. For a home loan with a down payment, use the mortgage calculator.