Loan Calculator — Monthly Payment & Total Interest

What this calculator does

It turns three numbers a lender quotes — the amount, the annual interest rate and the term — into the two that actually matter to a borrower: what you pay each month, and what the loan costs in total. It also shows the amortisation schedule, which is the month-by-month record of how the balance falls and how the split between interest and principal changes over the life of the loan.

Method

A fixed-rate loan with equal payments is an annuity, and its payment has a closed form:

M = P · r / (1 − (1 + r)⁻ⁿ)

where P is the amount borrowed, r is the monthly interest rate (the annual rate ÷ 100 ÷ 12) and n is the number of payments (years × 12). The schedule is then built month by month: interest is charged once on the outstanding balance, the payment is applied to that interest first and to the principal second, and the last payment is trimmed to whatever remains so the balance lands exactly on zero.

Why the interest is front-loaded

Interest is a percentage of what is still owed. At the start that is the entire amount, so the interest part of a payment dominates; late in the term the balance is small, so almost all of the payment reduces the principal. This is why overpaying early saves far more than overpaying later — the same money removes principal that would otherwise have been charged for years.

Example

Amount	Rate	Term	Monthly payment	Total interest
200,000	6.5%	30 years	1,264.14	255,088.98
200,000	6.5%	15 years	1,742.21	113,598.65
25,000	7.9%	5 years	505.71	5,342.85
1,000	0%	1 year	83.33	0.00

Halving the term raises the payment but cuts the interest by more than half, because the balance is repaid in far fewer months.

This is an estimate for planning, not financial advice and not a lender offer. It covers principal and interest only — fees, insurance and taxes are excluded, and a real statement may differ.

Frequently asked questions

How is the monthly payment worked out?

With the standard amortisation formula M = P·r / (1 − (1+r)⁻ⁿ), where P is the amount borrowed, r is the monthly interest rate (the annual rate divided by 12) and n is the number of monthly payments. Every payment is the same size; what changes each month is how much of it is interest and how much reduces the balance.

Why is so much of the early payment interest?

Interest is charged on the balance that is still outstanding, and at the start that balance is the whole loan. On a 30-year mortgage at 6.5%, the first payment is roughly 80% interest. As the balance falls, the interest part shrinks and the principal part grows — the schedule shows this month by month.

Does a shorter term save money?

Yes. A shorter term means a higher monthly payment but far less interest, because the balance is outstanding for fewer months. Compare a 15-year and a 30-year term on the same amount to see the trade-off in the totals.

Does this include fees, insurance or taxes?

No. The figure is principal and interest only. Property taxes, homeowners insurance, mortgage insurance and arrangement fees are separate and are usually collected with the payment, so a real statement is higher.

Is the interest compounded?

Interest is charged monthly on the outstanding balance at the annual rate divided by twelve. This is the standard method for consumer loans and mortgages in most countries; some lenders compound differently, and the exact statement governs.

Is this financial advice?

No. It is a calculator that shows the arithmetic of a repayment loan. It does not know your circumstances or the products available to you. Speak to a qualified adviser before borrowing.

Go deeper

Longer explanations of the problems this tool solves:

Sources

Standard amortisation formula: equal monthly payments M = P·r / (1 − (1+r)⁻ⁿ), where r is the monthly periodic rate and n the number of payments.
U.S. Consumer Financial Protection Bureau, What is a mortgage? — how principal, interest, taxes and insurance combine in a monthly payment. consumerfinance.gov/owning-a-home