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Monthly payment, total interest, and total cost for any loan — car, personal, student, or mortgage. Updates as you type.
Why the same payment covers less interest over time
A fixed monthly payment can be deceptive: even though the dollar amount never changes, the split between interest and principal inside it shifts dramatically over the life of the loan. Interest for a given month is calculated on whatever balance is still outstanding, and that balance is at its highest right at the start — so early payments are mostly interest with only a small sliver actually reducing what's owed. As the balance shrinks month by month, the interest portion shrinks with it and a growing share of each identical payment goes toward principal instead. This is exactly why paying extra toward principal early in a loan has an outsized effect on total interest paid — it shrinks the balance that all future interest calculations are based on, for the entire remaining term.
Interest rate vs. APR
The nominal interest rate reflects just the cost of borrowing the principal — the number this calculator uses directly. APR is a more complete figure that folds in certain lender fees and costs alongside the interest rate, which is why two loan offers can advertise the same interest rate but have meaningfully different APRs — and why comparing APRs, not just rates, is the more reliable way to compare real loan offers.
Frequently Asked Questions
How is the monthly payment calculated?
With the standard amortization formula: M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the amount borrowed, r the monthly rate (APR ÷ 12), and n the number of monthly payments. Every fixed-rate loan — car, personal, mortgage — uses this math.
Why is the total interest so high on long loans?
Interest accrues on the outstanding balance every month, and long terms keep that balance high for years. Stretching $25,000 at 7.5% from 5 to 7 years drops the payment ~$120/month but adds about $2,000 in interest.
Why does more of my payment go toward interest at the start of the loan?
Interest each month is calculated on the remaining balance, which is highest at the very start of the loan. As the balance shrinks with each payment, the interest portion shrinks too, so a growing share of the same fixed payment goes toward principal over time.
What's the actual difference between the interest rate and APR?
The interest rate reflects only the cost of borrowing the principal. APR folds in certain lender fees on top of that rate to give a fuller picture of the loan's true cost — which is why two loans advertising identical interest rates can carry different APRs, and why comparing APRs is the more reliable way to shop between offers.
Does this include taxes, insurance, or fees?
No — it computes principal and interest only. Mortgage escrow (property tax, insurance) and origination fees come on top. For a true cost comparison between offers, compare APRs, which fold most fees in.
How can I pay less interest overall?
Three levers: a shorter term, a lower rate (shop around or improve credit first), or extra principal payments — even small extra payments early in the loan cut the total interest disproportionately. Confirm your loan has no prepayment penalty.