Calculate Loan Payments — Know Exactly What You're Borrowing
Before signing any loan agreement, you should know three things: the monthly payment, the total amount you'll pay over the loan's lifetime, and how much of that is interest. Cluster Tools's Loan Calculator answers all three instantly, plus shows you the full amortization schedule.
No data is sent anywhere. All calculations happen in your browser.
The Loan Payment Formula
Monthly payment for a fixed-rate, fully amortizing loan:
M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where:
- M — monthly payment
- P — loan principal (amount borrowed)
- r — monthly interest rate (annual rate ÷ 12)
- n — total number of monthly payments (years × 12)
Example: $20,000 car loan at 6% annual interest for 5 years:
- Monthly rate: 0.06 ÷ 12 = 0.005
- n = 60 payments
- Monthly payment: $386.66
- Total paid: $23,199.60
- Total interest: $3,199.60 (16% of the loan amount)
Amortization: How Payments Are Applied
Each monthly payment has two components: interest and principal. Early in the loan, most of the payment goes to interest. Gradually, as the principal decreases, more of each payment reduces the debt.
Example — first and last payments on the $20,000 loan:
| Payment | Interest Portion | Principal Portion | Remaining Balance | |---|---|---|---| | Month 1 | $100.00 | $286.66 | $19,713.34 | | Month 30 | $51.94 | $334.72 | $10,030.84 | | Month 60 | $1.93 | $384.73 | $0 |
This is why paying extra principal early in a loan is so powerful — it shortens the period of high-interest payments.
How Interest Rate Affects Total Cost
The interest rate's impact is much larger than most people realize:
| Loan Amount | Rate | 5-Year Monthly Payment | Total Interest | |---|---|---|---| | $20,000 | 4% | $368.33 | $2,099.80 | | $20,000 | 6% | $386.66 | $3,199.60 | | $20,000 | 10% | $424.94 | $5,496.40 | | $20,000 | 15% | $475.80 | $8,548.00 |
A 6-percentage-point difference in rate (4% vs 10%) costs an additional $3,396 in interest on the same loan. Rate matters.
Extra Payments
Making additional principal payments reduces the total interest and shortens the loan term significantly. The calculator shows the impact of extra monthly payments on total interest saved and months eliminated.
On the $20,000 at 6% example:
- Extra $50/month: saves $396 in interest, pays off 6 months early.
- Extra $100/month: saves $726 in interest, pays off 11 months early.
Step-by-Step: How to Use
- Enter the loan amount (principal).
- Set the annual interest rate (from your loan offer).
- Choose the loan term in years or months.
- Optionally enter extra monthly payments.
- Read the results — monthly payment, total interest, total cost, and full amortization schedule.
Frequently Asked Questions
Why doesn't my result match my actual loan statement? Minor differences can result from: payment date vs. start date conventions, how the lender handles partial-period interest at origination, rounding in payment application, or fees included in your loan that aren't part of the calculation.
Does this work for mortgages? Yes — this is a standard fixed-rate amortization calculator that works for mortgages, car loans, personal loans, and any fixed-rate installment loan. For a dedicated mortgage calculator with property tax and PMI estimates, use the Mortgage Calculator.
Can I calculate a balloon payment loan? Not directly — this calculator assumes a fully amortizing loan where the balance reaches zero at the end of the term.
Related Tools
- Mortgage Calculator — mortgage-specific calculator with additional fields.
- Compound Interest Calculator — the opposite perspective: how money grows when you're saving.
- ROI Calculator — evaluate whether borrowing to invest makes financial sense.
- Percentage Calculator — calculate what percentage of a payment is interest vs. principal.