Loan Calculator
Calculate monthly payments, total interest, and full amortization schedule for any loan.
How to use Loan Calculator
- 1Enter loan details
Loan amount, annual interest rate, and term in years.
- 2See payment
Monthly payment, total interest, and total cost calculate instantly.
About Loan Calculator
Whether you are buying a car, taking on student debt, or financing any major purchase, understanding what monthly payments actually cost — and how much of that money goes to interest versus principal — is the single most important number in personal finance. The standard amortizing-loan formula assumes equal monthly payments where the interest portion shrinks as the principal balance falls. Early payments are mostly interest; later payments are mostly principal.
Utilify's calculator gives you the monthly payment, total interest paid over the life of the loan, and total amount paid (principal + interest). The formula used is P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), where P is the principal, r is the monthly interest rate, and n is the number of payments. Note: this is the base principal-and-interest payment. For mortgages, you also need to add property tax, insurance, and possibly PMI — for that use the dedicated Mortgage Calculator.
The reason early payments feel like they barely dent the balance is amortization. In month one, interest is charged on the entire principal, so most of your payment covers interest and only a sliver reduces what you owe. As the balance falls, the interest slice shrinks and the principal slice grows, accelerating toward the end. Seeing the totals makes the real cost of a long term obvious: stretching a loan over more years lowers the monthly payment but can dramatically increase the total interest you pay.
The term you choose is the biggest lever after the rate itself. A 4-year auto loan has higher monthly payments than a 6-year loan on the same amount, but the 6-year version can cost hundreds or thousands more in total interest. Running both side by side turns an abstract trade-off into concrete dollars, which is exactly the comparison you want before signing.
One distinction to keep in mind: the interest rate is not the same as the APR. APR folds in certain fees and points to reflect the true annualized cost of borrowing, so it is usually slightly higher than the nominal rate. This calculator works from the interest rate you enter; when comparing real lender offers, compare their APRs, since that figure captures costs the monthly-payment math alone does not.
Level-payment vs level-principal — the same loan, two different shapes
There are two standard ways to repay an amortizing loan, and they cost different amounts. The figures below are computed for this calculator’s default inputs — $20,000 at 6.5% over 5 years — so the left column reproduces exactly if you enter them above:
| Level payment (what this calculator computes) | Level principal | |
|---|---|---|
| What stays constant | The total monthly payment: $391.32 every month for 60 months | The principal portion: $333.33 every month, so the total payment shrinks over time |
| First payment → final payment | $391.32 → $391.32 | $441.67 → $335.14 |
| Total interest over 5 years | $3,479.38 | $3,304.17 — about $175 less |
| Why the interest differs | The balance falls slowly at first, so more months accrue interest on a high balance | The balance falls by the full $333.33 from month one, so less interest accrues overall |
| Where it is standard | US mortgages, auto loans, personal loans | Common for mortgages in South Korea and several European and Asian markets, and in some business lending |
| The trade-off | A predictable payment that is easier to budget around | Higher payments in the early years in exchange for a lower total cost |
Level-principal figures are computed as principal ÷ 60 plus interest on the remaining balance each month; its total interest has the closed form P × r × (n + 1) ÷ 2, where r is the monthly rate and n the number of payments.
When to use Loan Calculator
- Car loan comparison
Compare a 4-year vs 6-year auto loan to see how the term affects total interest paid.
- Student loan planning
See how an extra $100/month in payments changes total interest over a 10-year term.
- Refinance decisions
Compare current loan terms to a refinance offer to see the actual dollar savings.
Four ways loan math misleads people
- Shopping by monthly payment alone
On a $20,000 loan at 6.5%, the 6-year term costs $336.20 a month against $474.30 for the 4-year — the longer loan looks $138 cheaper. But its total interest is $4,206 versus $2,766: the "cheaper" loan costs $1,440 more. A longer term is sometimes the right call for cash-flow reasons; the mistake is not seeing the second number before deciding.
- The add-on rate illusion
Divide our example’s $3,479 total interest by $20,000 and by 5 years and you get 3.48% a year — which makes a 6.5% loan feel like half its real rate. The division is wrong because you do not keep all $20,000 for all 5 years; the balance falls every month. Some financing offers are quoted as "add-on" rates that exploit exactly this arithmetic, which is why two loans quoting similar-sounding numbers can differ enormously in true cost.
- Expecting an extra payment to lower next month’s bill
On a standard amortizing loan, paying extra principal does not change the scheduled payment — it stays fixed, and the loan simply ends earlier with less total interest. The payment itself only drops if the lender recalculates (recasts) the schedule, which is a specific arrangement rather than the default behavior.
- Assuming early payoff always saves the remaining interest
The amortization math here assumes simple interest accruing on the outstanding balance, where paying off early saves every month of interest you skip. Some loans are instead precomputed — interest allocated up front using schemes like the Rule of 78s that favor the lender on early payoff — and some carry prepayment penalties. Whether early payoff saves what the schedule suggests depends on which kind of contract you signed, so that is worth checking before counting the savings.
Frequently asked questions
Which formula is used?+
The standard amortizing-loan formula: P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), where P is the principal, r is the monthly interest rate, and n is the number of payments.
Does it include fees or insurance?+
No — this is the base principal-and-interest payment. Taxes, insurance, origination fees, and PMI are not included. For home loans, use the Mortgage Calculator.
What is the difference between interest rate and APR?+
The interest rate is the cost of borrowing the principal; the APR also folds in certain fees and points, so it is usually a bit higher and better reflects the true annual cost. Compare lender offers by APR.
Why do early payments barely reduce the balance?+
Because of amortization: interest is charged on the full remaining balance, so early payments are mostly interest and only a small part reduces principal. The principal portion grows as the loan progresses.
How does a longer term affect the cost?+
A longer term lowers the monthly payment but increases the total interest paid, sometimes substantially. Comparing two terms side by side shows the real dollar trade-off.
Does this calculator support equal-principal (level-principal) repayment?+
No — it computes the standard level-payment schedule, where the total payment is the same every month. The comparison table on this page shows how the two structures differ on the same loan, including the total-interest gap.
This calculator is for educational purposes only and does not constitute financial advice. Actual loan terms, rates, and fees vary by lender and borrower — consult a qualified financial professional before making borrowing decisions.
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From the blog
PMI runs about $30-$70/month per $100,000 borrowed when you put under 20% down. What it costs, when it cancels at 78%-80% LTV, and how to skip it.
The exact amortization formula behind your mortgage payment, why a $400,000 loan at 6.75% costs about $2,594 a month, and how to run the numbers yourself.