How to Calculate Loan Payments and Total Cost
Understand principal, interest, term, monthly payment and why a longer term can cost more.
What it does and when to use it
Loan payment depends on amount, interest rate and number of months. A longer term can lower the monthly payment but often increases total interest paid.
What information to enter
Enter loan amount, annual rate, term and fees if relevant. Compare at least two scenarios: comfortable payment versus lower total cost.
How to understand the result
The result estimates monthly payment, total paid and total interest. If the payment is low because the term is long, check how much extra interest it creates.
Recommended step-by-step workflow
- Check the assumptionsLoan payment depends on amount, interest rate and number of months. A longer term can lower the monthly payment but often increases total interest paid.
- Use matching unitsEnter loan amount, annual rate, term and fees if relevant. Compare at least two scenarios: comfortable payment versus lower total cost.
- Compare with another scenarioThe result estimates monthly payment, total paid and total interest. If the payment is low because the term is long, check how much extra interest it creates.
Formula at a glance
Short example
Common mistakes
- Choosing the lowest monthly payment without checking total interest.
- Comparing offers without fees, insurance or early repayment rules.
Frequently Asked Questions
Why does payment fall when term increases?
The principal is spread over more months, but interest is usually paid for longer.
Should I repay early?
Sometimes, but check prepayment fees, alternative rates and cash-flow needs.
Are my inputs saved?
No. The calculator runs in the browser and does not store your personal input values.