How this loan calculator works
The calculator uses the standard amortization (EMI) formula: payment = P × r ÷ (1 − (1 + r)−n), where P is the amount borrowed, r is the monthly rate (APR ÷ 12), and n is the number of monthly payments. Every payment first covers that month's interest (balance × monthly rate); the remainder reduces principal. That's why the schedule below shows interest dominating early payments and principal dominating late ones.
Example: $20,000 at 6% for 60 months
The monthly payment is $386.66. Over five years you pay about $3,199 in interest — roughly 16% on top of the amount borrowed. Add $50/month extra and the loan finishes about 7 months early with roughly $450 less interest.
Tips for lowering your loan cost
- Shorter term beats lower payment. A 48-month loan at the same rate always costs less total interest than 72 months.
- Round up your payment. Extra principal is the cheapest prepayment strategy with no refinancing fees.
- Compare APR, not the sticker rate. APR includes most lender fees.
- Check for prepayment penalties before making large extra payments — most US auto and personal loans have none.
Frequently asked questions
How do I calculate my monthly loan payment?
Payment = P × r ÷ (1 − (1+r)−n). For $20,000 at 6% APR over 60 months: $386.66/month. Enter your own numbers above for an instant answer.
What is an amortization schedule?
A month-by-month table splitting each payment into interest and principal and tracking the falling balance. This page generates the complete schedule for any loan.
Do extra payments really save money?
Yes — extra amounts go 100% to principal, eliminating all future interest on that portion. Use the extra-payment field above to see your exact savings and earlier payoff date.
What's the difference between APR and interest rate?
APR includes most fees, so it's the right number for comparing loan offers. This tool compounds your rate monthly, matching how US lenders bill.
Is it better to take a longer loan term?
Longer terms shrink the monthly payment but grow total interest — $20,000 at 6% costs ~$3,199 interest over 60 months but ~$3,865 over 72 months.