Payment Calculator

A loan is an agreement to receive money now and repay it later, and almost every decision about one comes down to two numbers: how long it runs and what it costs each month. The two calculators above take those from opposite ends. The first fixes the term and returns the payment; the second fixes the payment and returns the term.

On $200,000 at 6%, a 15-year term needs $1,687.71 a month and costs $103,788 in interest. Paying $2,000 a month instead clears the same loan in 11 years 7 months and costs $77,952, which is $25,836 less for $312 more a month.

Fixed term

Mortgages, auto loans, and most personal loans are written this way: a set number of payments, calculated so the balance reaches zero on the final one. Choosing the term is one of the larger financial decisions attached to a loan, because it sets how long the obligation sits on your budget.

The reasoning goes in both directions. A shorter mortgage suits someone who values a lower rate and has savings behind them, or who is uncertain about long-term job security and wants the debt gone. A longer one can be deliberate too, timed so the final payment lands near retirement or the point where Social Security begins.

Car loans show the trade in a compressed form, with terms running from 12 months to 96. The longest term always produces the smallest payment, which is why it is tempting, and it always costs the most overall. Worth testing several against your actual budget rather than taking the one the dealer leads with. For those specific cases, see the Mortgage Calculator and the Auto Loan Calculator.

Fixed monthly payment

The second calculator answers the reverse question: given what you can pay, when does this end? It is the natural way to think about credit card debt, where no term is fixed and the payoff date depends entirely on what you send each month.

It is also how to price an overpayment. Add whatever spare money you have to the monthly figure and the payoff date moves forward, because every dollar beyond the interest charge goes directly at the principal. The chart beside the result shows what an extra $100, $250, or $500 a month does to both the term and the total interest, and the effect is usually larger than people expect.

One case produces no answer at all. If the payment is less than the interest charged in the first month, the balance grows rather than shrinks and the loan never clears. The calculator flags this rather than returning a nonsense number: at that point the loan amount has to come down, the payment has to go up, or the rate has to be lower.

Interest rate against APR

The rate field accepts either, and the distinction matters more than it sounds. The interest rate is the cost of borrowing the principal, nothing else. APR is broader, folding in broker fees, discount points, closing costs, and administrative charges, spread across the life of the loan rather than paid upfront.

On a large mortgage that difference runs to thousands of dollars. Where a loan carries no fees at all, the two are identical. Enter the interest rate to see the loan mechanics on their own; enter the APR to see what the borrowing actually costs, which is why advertised APRs give the more honest comparison between lenders. Our APR Calculator converts between them.

Fixed and variable rates

Most consumer loans carry a fixed rate: conventionally amortised mortgages, auto loans, and student loans usually hold the same rate for the full term, which is what both calculators assume. Adjustable-rate mortgages, home equity lines of credit, and some personal and student loans are variable instead.

A variable rate moves with an index, commonly the Federal Reserve's key rate or, historically, Libor. When the index moves, the payment moves with it, and so does the total interest owed across the remaining term. Many variable loans carry a cap limiting how high the rate can go regardless of the index, and lenders only reset at intervals set out in the contract, so an index change does not necessarily reach your payment the same month.

Variable rates favour the borrower when rates are trending down and punish them when trending up. Credit cards can be either, and issuers are not required to give advance notice before raising a variable card rate. Borrowers with strong credit can often ask for a better rate on a variable loan or card and get one.

Secured and unsecured loans

What backs the loan sets the rate more than almost anything else you can control. A secured loan is tied to an asset the lender can take if you stop paying: the house on a mortgage, the car on an auto loan. That collateral lowers their risk, and the rate reflects it.

An unsecured loan has nothing behind it but your promise and your credit history, which is why personal loans and credit cards price well above mortgages for the same borrower. The gap is routinely 10 percentage points or more, and on the calculators above a difference that size changes the total interest far more than any realistic change in term.

This is also why consolidating card debt into a secured loan looks so attractive on paper, and why it deserves caution: it converts a debt that could be defaulted on into one that could cost you the asset.

Where the payment actually goes

A fixed payment does not split evenly between interest and principal. Interest is charged on what is still outstanding, so the first payment carries the most interest and the least principal, and the ratio shifts every month after that.

On the $200,000 15-year example, the first payment sends $1,000 to interest and $688 to principal. By the final year almost the whole payment reduces the balance. This front-loading is why an extra payment early is worth far more than the same money later, and why leaving a loan in its first years costs proportionally more than the elapsed time suggests.

It also explains the shape of the balance line in the charts above: nearly flat at first, then falling away steeply once the principal share takes over.

What the calculators leave out

Both price principal and interest only. On a mortgage, the amount leaving your account each month also includes property tax, homeowners insurance, and often mortgage insurance and HOA fees, which together can add 30% or more to the payment. On a car loan, sales tax, registration, and dealer fees may be rolled into the financed amount before this calculation starts.

Neither models a prepayment penalty, which some lenders charge for clearing a loan early, nor variable rate resets, nor fees paid at closing rather than financed. Check the contract for the first of these before planning an aggressive payoff, since it can erase part of the interest saving.

How these calculators work

The fixed-term calculator uses the standard amortisation formula, solving for the payment that reduces the balance to zero across the number of months you set. The fixed-payment calculator rearranges the same relationship to solve for the number of periods instead, using logarithms, then rounds up to a whole month.

Both then rebuild the loan month by month to produce the charts, tracking the balance alongside cumulative interest and principal. For a payment schedule row by row, use the Amortization Calculator; to work backward from a known payment to the rate behind it, use the Interest Rate Calculator.