What this calculator does
It computes the level payment that repays a fixed-rate installment loan, such as a car loan, personal loan or student loan, in equal installments. It also shows how much of the total goes to interest and builds an amortization schedule for the chosen payment frequency.
Formula and assumptions
PMT = P × i ÷ (1 − (1 + i)^−n)
- P = amount borrowed
- i = periodic rate = annual rate ÷ 100 ÷ payments per year
- n = total number of payments = years × payments per year
The stated annual rate is assumed to compound once per payment period, the usual convention for amortizing consumer loans. If i = 0, PMT = P ÷ n. Each period's interest is the outstanding balance × i, and the last payment is adjusted by cents so the balance ends at exactly zero.
Worked examples
$20,000 for 5 years at 7%, monthly
- i = 0.07 ÷ 12 ≈ 0.0058333; n = 60.
- PMT = 20,000 × 0.0058333 ÷ (1 − 1.0058333^−60) ≈ $396.02.
- Total repaid ≈ $23,761.44; interest ≈ $3,761.44.
Car loan: $25,000 for 72 months at 5.99%
i = 0.0599 ÷ 12, n = 72. PMT ≈ $414.20 per month, with about $4,822.70 in total interest.
Interest-free: $12,000 over 48 months at 0%
PMT = 12,000 ÷ 48 = $250.00; total interest = $0.
Interpreting results
A longer term lowers each payment but raises total interest. Compare the "Total interest" line across terms, not just the payment. The interest share shows how much of every dollar repaid is the cost of borrowing.
Common mistakes
- Entering the APR when the loan documents give a different note rate (or vice versa).
- Forgetting fees, taxes or add-ons rolled into the amount financed.
- Assuming biweekly payments always save money. The schedule matters only if the total paid per year changes.
Limitations
Not suitable for interest-only loans, balloon loans, credit cards, variable-rate loans or loans that accrue simple daily interest with irregular payment dates. Results are estimates, not a loan offer. See the CFPB's guidance on auto loans for questions to ask lenders.
Related: mortgage calculator and compound interest calculator.
Frequently asked questions
What happens with a 0% interest loan?
The payment is the amount borrowed divided by the number of payments, and total interest is zero. A $12,000 loan over 48 months is $250 per month.
Do biweekly payments save interest?
Paying every two weeks means 26 payments a year. If the payment is sized for that schedule (as here), the savings are small. Savings come mainly from paying more in total, such as making half the monthly payment every two weeks, which adds up to 13 monthly payments a year.
Is the interest rate the same as the APR?
Not necessarily. APR includes certain fees as well as interest. This calculator uses the stated interest rate to compute payments; use the APR to compare loan offers.