Fix any two of the three, and the third follows.
Payment, loan amount, and term form a triangle: pin down any two and the math gives you the third. Solve for the monthly payment on a loan, work backward to how much you can borrow at a payment you can afford, or find how long it takes to clear a balance. Every answer comes with the full amortization behind it.
What do you want to solve for?
What these numbers tell you
The loan over time
Balance and interest paid
Where each year's money goes
Each bar is one year of payments. Early on almost all of it is interest; the split flips as the balance falls.
Key milestones
Full amortization schedule
Click any year to open its payments. This is the schedule for the loan the calculator solved above.
| Date | Payment | Principal | Interest | Balance |
|---|
How payments work
How Monthly Loan Payments Are Calculated
Monthly loan payments are determined 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. Each payment is split between interest and principal, with early payments being mostly interest. As you pay down the balance, a larger portion of each payment goes toward principal, which is why extra payments early in the loan term save the most money.
The Relationship Between Term, Rate, and Payment
Loan term and interest rate have an inverse relationship with your monthly payment but a direct relationship with total cost. Extending a $20,000 loan from 36 to 60 months at 7% drops your payment from $617 to $396 but adds about $1,600 in total interest. Similarly, reducing your rate by just 1% on a 5-year loan saves roughly $500-$600 in total interest. Understanding this tradeoff helps you choose the right balance between affordable payments and minimizing total borrowing cost.
How to Reduce Your Monthly Payment
The most effective ways to lower your monthly payment include extending the loan term, negotiating a lower interest rate, or making a larger down payment to reduce the principal. Refinancing an existing loan when rates drop can also provide significant savings. However, extending the term increases total interest paid, so the best strategy is to secure the lowest possible rate and choose the shortest term you can comfortably afford, then make extra payments when possible to pay off the loan early.
Fixed vs Variable Rate Loans
Fixed-rate loans lock in your interest rate for the entire term, providing predictable monthly payments that never change. Variable-rate loans (also called adjustable-rate) start with a lower introductory rate that adjusts periodically based on a benchmark index like the prime rate or SOFR. Variable rates can save money if rates stay flat or decline, but they carry the risk of significantly higher payments if rates rise. Fixed rates are generally recommended for long-term loans, while variable rates may work for shorter terms.
Common questions
How do I calculate my monthly payment?
Monthly payment is calculated with the formula M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate (annual rate / 12 / 100), and n is the total number of monthly payments.
How does the loan term affect total interest paid?
Longer terms dramatically increase total interest. A $20,000 loan at 7% costs about $2,200 in interest over 3 years, about $3,800 over 5 years, and about $15,900 over 15 years. The monthly payment drops, but you pay far more overall.
What is the difference between fixed and variable rate loans?
Fixed-rate loans keep the same rate and payment for the entire term, making budgeting easy. Variable-rate loans start with a lower rate that adjusts periodically based on market conditions, which means your payment can increase or decrease.
Can I lower my payment without refinancing?
Options include making a lump-sum principal payment to reduce the balance, requesting a rate reduction from your lender, or extending the loan term. Some lenders allow term modifications without a full refinance, though this increases total interest.
Estimates for planning only. Actual schedules depend on your exact rate, day-count method, payment timing and any fees your lender adds. Confirm the numbers with your lender before you rely on them.