Loan Payment Calculator
Calculate the monthly instalment, total repayment and total interest of a fixed instalment loan using the amortising method.
Input Data
Results
At a glance:Loan payment is the fixed monthly amount repaid under the amortising method for a fixed instalment loan. The monthly payment formula is PMT = P × r × (1+r)^n ÷ [(1+r)^n − 1], where P is the loan amount, r is the monthly rate (annual rate ÷ 12) and n is the total periods (years × 12); total interest = monthly payment × n − loan. This model applies to private loans, car loans and other fixed instalment products; comparisons should use the Annual Percentage Rate (APR).
Formula
Monthly rate r = annual rate% ÷ 12; total periods n = years × 12.
Monthly payment = loan × r × (1+r)^n ÷ ((1+r)^n − 1).
Total repayment = monthly payment × n; total interest = total repayment − loan.
$$PMT = P \times \dfrac{r(1+r)^{n}}{(1+r)^{n} - 1}, \quad r = \dfrac{\text{annualRate}}{12}, \quad n = \text{years} \times 12$$$$\text{TotalRepayment} = PMT \times n, \quad \text{TotalInterest} = PMT \times n - P$$How to Use
- Enter the loan amount borrowed.
- Enter the annual rate and repayment term.
- View the monthly payment, total repayment and total interest for the whole term.
FAQ
What is a loan payment, and how is it calculated?
A loan payment is the fixed monthly amount repaid under the amortising method for a fixed instalment loan. The formula is PMT = P × r × (1+r)^n ÷ [(1+r)^n − 1], where P is the loan amount, r is the monthly rate (annual rate ÷ 12) and n is the total periods (years × 12).
Why is my early repayment mostly interest?
Under the amortising method the outstanding balance is highest at the start, so each payment covers more interest and less principal early on. As the balance falls, the principal share of each payment grows.
Does a lower monthly payment mean a cheaper loan?
Not always. A lower payment often means a longer term, which can raise the total interest paid. Compare the total repayment and the APR, not just the monthly figure.
Which loans use this equal-instalment method?
This model applies to private loans, car loans, personal instalment loans and similar fixed-term products. Mortgages also use it, though Hong Kong mortgages usually float with HIBOR/Prime and may have different features.
How can I reduce my loan payment or total interest?
You can lower the payment by borrowing less, choosing a lower rate, or extending the term; you can cut total interest by shortening the term or making extra repayments when allowed. Weigh the lower monthly burden against the higher overall cost of a longer term.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.