Simple Loan Calculator
Free simple loan calculator. Get the monthly payment, total interest, and payoff impact of extra payments for personal, student, or car loans.
A simple loan calculator finds the fixed monthly payment for any amortizing loan, then reports total interest and total cost — and, if you add an extra monthly amount, the interest saved and months cut from the term. For a $20,000 loan at 8% over 60 months the payment is $406, costing $4,332 in interest; adding $50 a month clears it 7 months early and saves $590.
The payment formula
For an annual percentage rate divided by 12 (call it r) and a term of n months:
payment = principal × r ÷ (1 − (1 + r)−n)
Total interest is payment × n − principal. When an extra payment is entered, the calculator simulates each month: interest accrues on the remaining balance, the base payment plus the extra is applied, and the balance falls by whatever is left after interest. Extra money goes straight to principal, so it also reduces every future month’s interest.
Worked example with the defaults
$20,000, 8% APR, 60 months. The monthly rate is 8% ÷ 12 = 0.6667%.
| Step | Calculation | Result |
|---|---|---|
| Monthly payment | $20,000 × 0.006667 ÷ (1 − (1.006667)−60) | $406 |
| Total paid | $406 × 60 | $24,332 |
| Total interest | $24,332 − $20,000 | $4,332 |
What an extra payment saves
| Extra per month | Payoff | Total interest | Interest saved | Months earlier |
|---|---|---|---|---|
| $0 | 60 months | $4,332 | — | — |
| $50 | 53 months | $3,741 | $590 | 7 |
| $100 | 47 months | $3,295 | $1,036 | 13 |
Paying an extra $50 on a $406 payment is a 12% increase that removes months of term and cuts interest by 14%. Because the simulation applies extras to principal, the saving compounds rather than being linear.
Payment per $1,000 borrowed
Useful for quick mental math on any loan size — multiply by your thousands borrowed:
| APR | 36 months | 48 months | 60 months | 72 months |
|---|---|---|---|---|
| 5% | $29.97 | $23.03 | $18.87 | $16.10 |
| 8% | $31.34 | $24.41 | $20.28 | $17.53 |
| 12% | $33.21 | $26.33 | $22.24 | $19.55 |
At $20,000 that is 20 × $20.28 = $405.60 for a 60-month loan at 8%, matching the calculator.
Common mistakes
- Comparing loans by payment alone. A longer term lowers the payment but raises total interest; two loans can share a payment and differ by thousands in cost.
- Confusing APR with the monthly rate. Divide by 12. A 0.6667% monthly rate is very different from 8% a month.
- Assuming extra payments always reduce principal. Some lenders apply them to future scheduled payments. Confirm with the servicer.
- Ignoring fees. Origination fees are not in the rate but are part of the true cost.
Why is most of my early payment interest rather than principal?
Interest is charged on the outstanding balance, which is highest at the start. As the balance falls, the interest portion of each fixed payment shrinks and the principal portion grows. That is why early extra payments are worth far more than the same amount paid later.
Can I use this for a mortgage?
Yes, for principal and interest, but it does not model escrow, taxes, insurance, or PMI. Use the mortgage-focused tools for those.
What term should I choose?
The shortest term whose payment you can sustain. A longer term buys breathing room at the cost of total interest; the table above shows how much each additional year costs at a given rate.
How is total cost different from interest?
Total paid is every dollar you hand over, principal included; total interest is only the extra beyond the amount borrowed. On the default $20,000 loan, total paid is $24,332 and total interest is $4,332 — the $20,000 itself is not a cost, it is the money you received.
What happens if I increase the term?
The payment falls but total interest rises. At 8%, a $20,000 loan costs $4,332 in interest over 60 months; stretching it to 72 months lowers the payment from $406 to about $351 but adds roughly $900 in interest. The per-$1,000 table shows the same pattern across rates and terms.
For a vehicle purchase, the auto loan calculator adds amortization schedule handling. If you are weighing repayment against investing the same money, compare this rate with the return in the investment calculator.