Calculator Use
Use this loan calculator for a simple calculation of your monthly payment along with interest paid on the loan.
Create and print a loan amortization schedule.
This calculator assumes interest compounding occurs monthly. For additional compounding options use our Advanced Loan Calculator.
Loan Payment Formula
To find the monthly payment we solve this equation for Payment; where n is number of months, and i is the interest rate per month in decimal form:
\( \text{Payment}=\dfrac{\text{Loan Amount} \times i(1+i)^n}{(1+i)^n-1} \)
Example Loan Payment Calculation
Suppose you take a $20,000 loan for 5 years at 5% annual interest rate.
n = 5 × 12 = 60 months
i = 5% / 100 / 12 = 0.004167 interest rate per month
Then using the formula with these values:
\( \text{Payment}=\dfrac{\text{Amount} \times i(1+i)^n}{(1+i)^n-1} \)
\( =\dfrac{(\$20,000)(0.004167)(1+0.004167)^{60}}{(1+0.004167)^{60}-1} \)
\( =\$377.42 \)
Total Interest Paid on a Loan
Total amount paid with interest is calculated by multiplying the monthly payment by total months. Total interest paid is calculated by subtracting the loan amount from the total amount paid. This calculation is accurate but not exact to the penny since, in reality, some actual payments may vary by a few cents.
$377.42 × 60 months = $22,645.20 total amount paid with interest
$22,645.20 - $20,000.00 = 2,645.20 total interest paid
