Loan Calculator
Estimate your monthly loan payments, total interest, and total cost of a loan based on the amount, interest rate, and term.
About This Calculator
The Loan Calculator uses the standard amortization formula to compute your estimated monthly payment, total amount paid over the life of the loan, and the total interest you would pay. Enter your loan amount, annual interest rate, and loan term in years to get instant results. This tool is helpful for comparing loan offers, planning budgets, and understanding the true cost of borrowing.
How to Use
- Enter your values in the input fields above
- Click the calculate button to see results
- Review your results displayed below the inputs
- Use the reset button to clear all fields and start over
The Formula
How the calculation works under the hood
Amortizing loan payment
M = monthly payment, P = principal, r = monthly interest rate (annual / 12), n = total number of payments (years x 12).
Worked Example
Step-by-step walkthrough with real numbers
“You borrow $20,000 for 5 years at 7% annual interest.”
- 1Monthly rate r = 0.07 / 12 = 0.005833.
- 2Number of payments n = 5 x 12 = 60.
- 3Numerator = 0.005833 x (1.005833)^60 ≈ 0.00828.
- 4Denominator = (1.005833)^60 - 1 ≈ 0.4194.
- 5Monthly payment = 20,000 x (0.00828 / 0.4194) ≈ $396.02.
Monthly payment ≈ $396.02. Total paid ≈ $23,761. Interest ≈ $3,761.
⚠️Common Mistakes
- ✕Using the annual rate instead of the monthly rate in the formula.
- ✕Forgetting that loan terms are expressed in months, not years, inside the calculation.
- ✕Assuming the first payment is all principal — in amortized loans, early payments are mostly interest.
💡Pro Tips
- ✓Even one extra principal payment per year can shave years off a long-term loan.
- ✓Compare APR (which includes fees) rather than just the interest rate when shopping between lenders.
- ✓If your rate exceeds your projected investment returns, paying down debt faster usually beats investing extra cash.
Related Guides
Go deeper with these in-depth articles
Understanding Compound Interest: A Complete Guide
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Read guide →How to Pay Off Debt Faster: Snowball vs Avalanche Method
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Read guide →How to Calculate Your Debt-to-Income Ratio for a Mortgage
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Read guide →How to Budget Using the 50/30/20 Rule
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Read guide →Understanding Amortisation: Where Your Mortgage Payment Goes
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Read guide →How Compound Interest Works in a Savings Account
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Read guide →How to Plan for Retirement on a Middle-Class Income
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Read guide →How to Calculate Loan Interest: Simple vs. Compound
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Read guide →How to Calculate Your Net Worth
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Read guide →Frequently Asked Questions
How is the monthly payment calculated?
We use the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate, and n is the total number of payments.
Does this include taxes and insurance?
No. This calculator estimates principal and interest only. Actual loan payments may also include property taxes, insurance, PMI, and other fees depending on the loan type.
Can I use this for mortgage calculations?
Yes, the formula works for any fixed-rate loan including mortgages. However, a dedicated mortgage calculator may provide more detailed breakdowns.
Is this calculator free to use?
Yes! All calculators on Get Precision Calculator are completely free with no limitations or sign-up required.
Is my data saved or tracked?
No. All calculations are performed locally in your web browser. Get Precision Calculator does not store, collect, or track your calculation data.
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