Short answer: Your monthly loan payment depends on three numbers only: how much you borrow, the annual interest rate, and how many months you take to repay it. A $20,000 loan at 6% over 5 years costs $386.66 a month — $23,199.60 in total, of which $3,199.60 is interest. Enter your numbers below and this free calculator shows your monthly payment, total paid and total interest before you sign anything.
Last updated: 28 October 2026 · Estimate only — not financial advice. This calculator assumes a fixed interest rate and equal monthly payments; fees, taxes and insurance are not included (see below).
The interest rate on the loan offer — not the APR. If you only have the APR, see the FAQ below.
How the math works
- Monthly interest rate = annual rate ÷ 12. A 6% annual rate means 0.5% a month.
- Number of payments = years × 12. A 5-year loan has 60 monthly payments.
- Monthly payment = loan amount × monthly rate × (1 + monthly rate) to the power of payments ÷ ((1 + monthly rate) to the power of payments − 1). This is the standard amortizing-loan formula: every payment covers that month's interest first, and the rest pays down the balance, so the interest part shrinks and the principal part grows over time.
- Zero-interest edge case: if the rate is 0%, the payment is simply loan amount ÷ number of payments, and the total equals the amount borrowed — the final payment absorbs the few cents of rounding, as real lenders do.
- Total paid = monthly payment (rounded to cents) × number of payments, so the figures in the result add up exactly. Total interest = total paid − loan amount.
Worked example (illustrative — not a real person's loan, not advice)
You borrow $20,000 at 6% annual interest over 5 years (60 payments):
- Monthly rate: 6% ÷ 12 = 0.5% (0.005)
- Monthly payment: $386.66
- Total paid: $386.66 × 60 = $23,199.60
- Total interest: $23,199.60 − $20,000 = $3,199.60
Now stretch the same loan to 7 years (84 payments) and the monthly payment falls to $292.17 — but the total paid rises to $24,542.28 and the interest to $4,542.28. That is the trade-off every borrower faces: a longer term feels lighter each month and costs more overall, because interest runs for longer on a balance that falls more slowly.
FAQ
Why does a longer term cost more in total, even though the monthly payment is lower?
Because interest is charged on the balance still owed. With a longer term, each payment pays down less principal, so the balance stays higher for longer and more months of interest pile up. Use the calculator on both terms before choosing — the monthly saving is real, but so is the extra interest.
Interest rate vs APR — which number do I enter?
Enter the interest rate, not the APR. The APR is a broader cost measure that folds in fees (origination fees, points, some closing costs) and is usually slightly higher than the interest rate. This calculator does not model fees, so entering the APR would overstate the payment. Compare APRs across lenders to judge total cost, but run the payment math on the interest rate.
Would paying extra each month actually help?
Yes — any extra payment goes straight to principal (tell your lender to apply it that way), which cuts the balance, cuts future interest, and shortens the loan. Even $50 extra a month on the $20,000 example above saves hundreds in interest. This calculator shows the scheduled payment only; it does not model extra payments.
Does this work for a mortgage or a car loan?
The math is the same for any fixed-rate, equal-monthly-payment loan — personal loans, car loans and standard fixed-rate mortgages all amortize this way. What it does not include is everything a mortgage payment usually bundles on top: property tax, homeowner's insurance and private mortgage insurance, which lenders often collect with the payment. A mortgage payment quote will be higher than this calculator's figure for exactly that reason.
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- Are Crypto Staking Rewards Taxed in the UK? HMRC Rules, Rates and Worked Examples (2026/27) — today's guide: UK staking rewards are taxed twice — as income when received, then as capital gains on any rise.
- Compound Interest Calculator — the mirror image of this tool: interest working for you instead of against you.
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- Salary to Hourly Calculator (US) — turn your annual salary into an hourly rate, and back again.
Sources
- Consumer Financial Protection Bureau (CFPB) — What is amortization?
- Consumer Financial Protection Bureau (CFPB) — Mortgages key terms (amortization, APR, fixed vs adjustable rates)
- Consumer Financial Protection Bureau (CFPB) — Auto loan key terms (amortization, APR, interest rate)
Disclaimer: This tool gives a simplified loan-payment estimate for education only. It is not financial advice, and it does not include fees, taxes, insurance or variable-rate changes. Your lender's actual payment may differ — always check the loan agreement.
— Adrian Cole, Bia Crypto
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