Loan payment calculator

Formula

How it works

Each month interest is charged on the remaining balance and the fixed payment covers that interest plus part of the principal. The formula finds the payment that brings the balance to exactly zero after n payments.

Worked example

The same calculation with the default values:

• Loan amount 200,000
• Annual interest rate 6 %
• Term in years 30
• Extra monthly payment (optional) 0

1. r = 6 ÷ 100 ÷ 12 = 0.005
2. n = 30 × 12 = 360
3. payment = 200,000 × 0.005 ÷ (1 − (1 + 0.005)^−360) = 1,199.10105
4. total = 1,199.10105 × 360 = 431,676.37811

Result: Monthly payment: 1,199.10 USD · Total paid: 431,676.38 USD · Total interest: 231,676.38 USD

Common mistakes

• Forgetting that extra payments only shorten the term if your lender applies them to principal immediately, not to a future payment.
• Comparing "total interest" (the original schedule) with "interest saved" as if they were the same figure - interest saved is the difference the extra payment makes.
• Not checking whether your real loan has an early-repayment fee before relying on the accelerated payoff date.