How is monthly payment calculated?

Monthly payments are calculated using the amortization formula: M = P × [r(1+r)^n] / [(1+r)^n - 1], where P is principal, r is monthly rate, and n is number of payments.

Loan Report — The Online Calculator

the-online-calculator.com/loan-calculator · Generated

Estimate based on standard amortization; excludes lender fees and insurance. Not financial advice.

Loan Calculator

Loan Amount

Annual Interest Rate

Loan Term

years

months

Monthly Payment

Total Payment

Total Interest

Sharing copies a link that re-opens this exact calculation — nothing is stored on our servers.

Principal

Interest

💡 What this means in real life

Daily interest cost

Interest as % of loan

Pay $100 extra/month

📐 Show the working

Exactly how we get from your numbers to — the same steps you'd follow by hand.

This is the standard amortization formula M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1] with your inputs substituted in. See our methodology for rounding rules, assumptions, and verified test cases.

Amortization Schedule

Year	Principal	Interest	Balance

#	Payment	Principal	Interest	Balance

Free Loan & Mortgage Calculator

Our free loan calculator helps you understand your monthly payments and total costs for any type of loan. Whether you're planning a mortgage, car loan, or personal loan, this tool provides instant calculations for monthly payments, total interest paid, and a complete amortization schedule.

How Loan Payments Are Calculated

Monthly loan payments are calculated using the standard amortization formula:

M = P × [r(1+r)ⁿ] / [(1+r)ⁿ - 1]

Where:

M = Monthly payment
P = Principal (loan amount)
r = Monthly interest rate (annual rate / 12)
n = Total number of payments

Types of Loans

Mortgage: Long-term loans for home purchases, typically 15-30 years
Auto Loan: Car financing, usually 3-7 years
Personal Loan: Unsecured loans for various purposes, 1-7 years
Student Loan: Education financing with various repayment options

Tips to Save on Interest

Make extra payments toward principal when possible
Choose a shorter loan term if affordable
Compare rates from multiple lenders
Improve your credit score before applying
Consider refinancing if rates drop significantly

Frequently Asked Questions

What is amortization? Amortization is the process of paying off a loan through regular payments over time. Early payments are mostly interest, while later payments are mostly principal.

Should I choose a 15 or 30-year mortgage? A 15-year mortgage has higher monthly payments but saves significantly on total interest. A 30-year mortgage has lower payments but costs more overall.

What affects my interest rate? Credit score, loan amount, down payment, loan term, and market conditions all influence your interest rate.

Can I pay off my loan early? Most loans allow early payoff, but check for prepayment penalties. Paying extra toward principal can save thousands in interest.

What is PMI? Private Mortgage Insurance is typically required when you put less than 20% down on a home. It protects the lender if you default.

How accurate is this calculator? This calculator uses the standard amortization formula and matches published lender examples — see our methodology page for the exact formulas, rounding rules, and verified test cases. Actual payments may vary slightly due to lender fees and insurance.

Can I share or save my calculation? Yes. The "Share this calculation" button copies a link that re-opens the calculator with your exact numbers — useful for comparing offers with a partner or adviser. You can also print a report or download the full month-by-month schedule as a CSV spreadsheet. Nothing is stored on our servers; everything stays in your browser.

Learn more: Read our comprehensive guide on Understanding Loan Payments for detailed explanations and strategies.

Sources & further reading

Consumer Financial Protection Bureau — "What is the difference between an interest rate and the APR?" consumerfinance.gov
Consumer Financial Protection Bureau — "Explore interest rates", live data on typical mortgage rates by profile. consumerfinance.gov
US Federal Trade Commission — consumer guidance on personal loans and comparing offers. consumer.ftc.gov

Written by Alex van den Berg · Last reviewed 4 July 2026 · How we test our calculators · Report an error

Related Calculators

VAT Calculator Percentage Calculator Discount Calculator Currency Converter