Skip to content
Toolore

Calculators

Loan Payment Calculator

Enter what you are borrowing, the rate and the term to see the repayment. The total interest figure is usually the more revealing one — on a long loan it can approach the amount borrowed.

Enter a loan amount, rate and term to see the repayment.

How to use this tool

  1. Enter the amount you are borrowing.
  2. Enter the annual interest rate the lender has quoted.
  3. Enter the term in years.
  4. Choose how often you repay — monthly is the usual arrangement, but fortnightly and weekly schedules are common for car and personal loans.
  5. Open the year-by-year breakdown to see how quickly the balance actually falls.

Formula and method

M = P × i ÷ (1 − (1 + i)^−n)
M
— payment per period
P
— amount borrowed
i
— interest rate for one period
n
— total number of payments

This is the standard amortising loan formula: it finds the fixed payment that clears both interest and principal exactly at the end of the term. At a zero rate it would divide by zero, so that case simply splits the principal evenly.

Worked examples

Borrowing $20,000 at 7% over 5 years, repaid monthly

  1. Monthly rate: 0.07 ÷ 12 = 0.0058333
  2. Number of payments: 5 × 12 = 60
  3. Payment: 20000 × 0.0058333 ÷ (1 − 1.0058333^−60) = 396.02

About $396 a month, repaying roughly $23,761 in total — around $3,761 of interest.

Notes and limitations

  • The schedule assumes every payment is made in full and on time, and that the rate does not change. A variable-rate loan will diverge from this.
  • Arrangement fees, insurance sold alongside the loan and any early-repayment charge are not included. On short loans these can cost more than the interest.
  • The advertised APR usually includes some compulsory fees, so entering the APR here gives a closer estimate of the true cost than the plain interest rate.
  • Payments are calculated in whole cents, and the final payment absorbs any rounding — the same way a real lender's schedule works.

Frequently asked questions

How is a loan repayment calculated?

The lender finds the fixed payment that will clear both the interest and the balance exactly at the end of the term. Early payments are mostly interest, because interest is charged on a balance that is still large; later payments are mostly principal.

Why does so little of my early payment reduce the balance?

Interest is charged on what you still owe. At the start that is almost the full amount, so most of the payment goes to interest. As the balance falls the interest portion shrinks and the principal portion grows — the year-by-year table shows this clearly.

Does paying fortnightly save money?

Usually a little, for two reasons: the balance is reduced more often, and 26 fortnightly payments add up to 13 monthly payments a year rather than 12. Check whether your lender permits it and whether extra payments reduce the principal or just sit ahead of schedule.

What is the difference between interest rate and APR?

The interest rate is the cost of borrowing alone. The APR folds in compulsory fees, so it is the better figure for comparing offers. Entering the APR in this calculator gives a more realistic total.

Can I use this for a mortgage?

The maths is the same, but the Mortgage Calculator adds a deposit field and lets you set the compounding convention, which matters in Canada. Use that one for property.

Related tools