Loan Calculator

How the loan payment is calculated

The calculator uses the standard amortizing loan formula, where P is the loan amount, r the interest rate per payment period, and n the number of payments:

payment = P × r ÷ (1 − (1 + r)⁻ⁿ)

For a monthly schedule, the annual rate is divided by 12. Each payment covers the interest accrued on the outstanding balance first, and whatever is left reduces the principal — which is why early payments are mostly interest and later ones are mostly principal.

Zero interest loans

With a 0% rate the formula would divide by zero, so the calculator simply splits the amount evenly across the payments: 12,000 over 24 months is exactly 500.00 per month with no interest at all.

Examples

• Car loan: 20,000 at 5% over 5 years = 377.42 per month, 2,645.48 total interest.
• Personal loan: 10,000 at 8% over 36 months = 313.36 per month.
• Interest free: 1,200 at 0% over 12 months = 100.00 per month.