Loan Payment Calculator

How are equal payments calculated?

Each payment covers interest on the outstanding balance and a share of principal. As the balance falls, less of each payment goes to interest and more goes to principal. The annuity equation equates the present value of the payments to the initial loan.

Example

A loan of 2100 at 10 percent per period with two payments requires 1210 each time. The first payment covers 210 interest and 1000 principal, leaving 1100. The next period adds 110 interest, so the second payment clears the balance. Total interest is 320.

Use the right rate

Enter an effective monthly rate for monthly payments. Converting an effective annual rate requires taking a twelfth root. Taxes and fees are excluded, so the result is not the full contractual cost of borrowing.

Check what the first payment contains

To follow the calculation, choose principal of 2310, period interest of 10 % and 2 payments. The equal payment is 1331. First period interest is 2310 × 0.10 = 231 and principal repayment is 1331 − 231 = 1100. Remaining principal is 2310 − 1100 = 1210. Interest in the next period is 121 and payment is again 1331, clearing the loan. Total payment is 2662 and total interest is 2662 − 2310 = 352. The example rate is not current market information. All amounts use the same currency.

Enter the payment count, rather than calendar months, in the Number of payments field. Monthly payments require interest for that same monthly period. The first payment occurs at period end. A first payment in advance, additional payments or variable interest require a different representation. Do not treat the entire payment as principal reduction. A large initial interest share means the balance falls by less than the payment. Reusing the displayed rounded amount each period can produce a small closing difference. Check the contractual payment schedule and rounding method separately. The calculation uses only the entered principal, period interest and payment count.

Frequently asked questions

How do I calculate a loan payment?

For principal 2100, an example rate of 10 percent per payment period and 2 equal payments, each payment is 1210.00 and total repayment is 2420.00 currency units. The first payment falls one period later and interest applies to the remaining balance. This preliminary estimate excludes taxes, insurance, fees and contract rounding, and the sample rate is not a market offer.

Calculate with these values