How to use the loan calculator
- Enter the loan amount you want to borrow.
- Add the interest rate (annual APR) and the term in years.
- See your monthly payment, the split between principal and interest, and the year-by-year schedule.
How loan payments are calculated
Loans are repaid with equal monthly payments using the amortization formula. Each payment covers the interest due that month, and whatever is left reduces the balance. Because the balance shrinks over time, later payments contain less interest and more principal.
P = amount r = monthly rate n = number of payments
What is amortization?
Amortization is the schedule that shows how each payment is divided between interest and principal until the loan reaches zero. At the start of a 30-year mortgage, most of your payment is interest. By the end, almost all of it pays down the balance. The schedule above shows this shift year by year.
Worked example
$250,000 at 5.5% over 30 years
The monthly payment is about $1,419. Over 30 years you pay roughly $511,000 in total — meaning about $261,000 in interest, more than the original loan.
Frequently asked questions
Pick a shorter term, get a lower rate, or overpay when you can. Even small extra payments early on cut the interest significantly because they shrink the balance that interest is charged on.
Yes. Mortgages use the same amortization formula. This also works for car loans, personal loans and student loans — just enter the relevant amount, rate and term.
No. It calculates principal and interest only. Property taxes, insurance and lender fees are extra and vary by location and provider.
APR is the annual percentage rate — the yearly cost of borrowing. This calculator divides it by 12 to get the monthly rate used in each payment.