Loan Calculator
Calculate monthly loan payments with a full amortization schedule.
Monthly Payment
$489.15
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $489.15 | $353.74 | $135.42 | $24,646.26 |
| 2 | $489.15 | $355.65 | $133.50 | $24,290.61 |
| 3 | $489.15 | $357.58 | $131.57 | $23,933.03 |
| 4 | $489.15 | $359.52 | $129.64 | $23,573.51 |
| 5 | $489.15 | $361.46 | $127.69 | $23,212.05 |
| 6 | $489.15 | $363.42 | $125.73 | $22,848.63 |
| 7 | $489.15 | $365.39 | $123.76 | $22,483.24 |
| 8 | $489.15 | $367.37 | $121.78 | $22,115.87 |
| 9 | $489.15 | $369.36 | $119.79 | $21,746.51 |
| 10 | $489.15 | $371.36 | $117.79 | $21,375.15 |
| 11 | $489.15 | $373.37 | $115.78 | $21,001.78 |
| 12 | $489.15 | $375.39 | $113.76 | $20,626.38 |
How Loan Payments Are Calculated
The monthly payment formula is: M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where P is the principal, r is the monthly interest rate (annual rate / 12), and n is the total number of payments. This formula ensures the loan is exactly paid off with the final payment.
In the early months of a loan, most of each payment goes toward interest. As the balance decreases, more of each payment reduces the principal. This is called amortization. Use our amortization calculator to see the full month-by-month breakdown.
How Interest Rate Affects Your Payment
On a $300,000 loan over 30 years:
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 5% | $1,610 | $279,767 |
| 6% | $1,799 | $347,515 |
| 7% | $1,996 | $418,527 |
| 8% | $2,201 | $492,467 |
Each 1% increase in rate adds roughly $190--$200/month and $70,000--$75,000 in total interest. This is why rate shopping matters -- even a 0.25% difference saves meaningful money over time.
Tips for Getting a Lower Interest Rate
A higher credit score is the single biggest factor. Lenders offer their best rates to borrowers with scores above 740--760. Even improving from 680 to 720 can save half a percentage point.
Shop at least three lenders. Rates vary more than most borrowers realize, even for the same loan amount and credit profile. Pre-approval applications within a 45-day window count as one inquiry for credit scoring purposes.
Consider paying points. One discount point costs 1% of the loan amount and typically reduces the rate by 0.25%. Do the math: if you plan to stay in the home long enough, it pays for itself.
Free Loan Calculator
Calculate the monthly payment for any fixed-rate loan using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate, and n is the total number of payments. This formula ensures each payment covers the interest due plus a portion of principal, fully paying off the loan by the end of the term.
The amortization schedule shows exactly how each payment is split between principal and interest over the life of the loan. Early payments are mostly interest; later payments are mostly principal. Understanding this pattern helps you see how extra payments can dramatically reduce total interest paid.
Loan Comparison Tips
When comparing loan offers, look beyond the monthly payment. A longer term reduces monthly payments but increases total interest paid — sometimes by tens of thousands of dollars. The total cost of the loan (principal + total interest) is the true measure of what you're paying. Even a 0.5% difference in interest rate can add up to thousands over a 15- or 30-year term.