How this calculator works
Standard amortisation: a fixed payment where early months are mostly interest and later months mostly principal. The table shows the balance at the end of each year.
- Payment = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
- P is the loan amount, r is the monthly rate (APR ÷ 12 ÷ 100) and n is the number of monthly payments (years × 12).
- A 0% loan is simply the amount divided by the number of payments.
Worked example
With these inputs: loan amount $15,000; apr 6.5%; term 5.
The result is monthly payment $293.49, with total interest $2,609.53 and total repaid $17,609.53.
Reading the balance table
Early payments are mostly interest, because interest is charged on a large balance. As the balance falls, more of each payment goes to principal. That's why the balance falls slowly in year one and quickly near the end.
If you plan to sell a car or refinance, the table shows roughly what you'd still owe at that point.
Shorter term or lower payment?
Try the same loan over 3, 5 and 7 years. The longer term lowers the monthly payment but raises the total interest, sometimes by thousands. For a car, a term of 4 years or less is a common guideline (the "4" in the 20/4/10 rule), and the How Much Car Can I Afford calculator applies it for you.
Frequently asked questions
How is a monthly loan payment calculated?
With the standard amortisation formula shown above. It finds the single fixed payment that covers each month's interest and brings the balance to exactly zero on the last payment.
Does this include taxes, fees or insurance?
No. It covers principal and interest only. Add fees to the loan amount if they're financed. Insurance and registration are separate monthly costs worth tracking as their own bills.
What APR should I enter?
The APR on your loan offer. It reflects the true yearly cost including most lender fees, so it's a better input than the headline interest rate.
How much interest will I pay in total?
It's shown as "Total interest": the monthly payment times the number of payments, minus the amount borrowed.
Can I use this for a mortgage?
For principal and interest, yes. Enter the loan amount and 30 or 15 years. A real mortgage payment usually also includes property tax, homeowners insurance and sometimes PMI, which aren't included here.