Find your monthly payment, total interest, and total cost for a mortgage, auto loan, or personal loan. Enter the amount, rate, and term to see the numbers.
A loan is repaid in regular payments (usually monthly). Each payment covers the interest that has accrued since the last payment, and the rest goes toward reducing the principal balance. Early in the loan, most of your payment goes to interest; later, most goes to principal. This is called amortization.
The standard monthly payment uses this formula:
M = P × [ r(1+r)n ] / [ (1+r)n − 1 ]
Let's walk through a realistic mortgage at 6.5% for 30 years so you can see how the numbers behave.
| Item | Value |
|---|---|
| Loan amount | $250,000 |
| Annual rate | 6.5% |
| Term | 30 years (360 payments) |
| Monthly payment | about $1,580.17 |
| Total paid over 30 years | about $568,862 |
| Total interest | about $318,862 |
For a $250,000 loan at 6.5%, here is how the two common terms compare:
| Term | Monthly Payment | Total Interest | Total Paid |
|---|---|---|---|
| 30 years | ~$1,580 | ~$318,862 | ~$568,862 |
| 15 years | ~$2,178 | ~$142,089 | ~$392,089 |
Choosing the 15-year term raises the monthly payment by about $598 but saves roughly $176,000 in interest. For many buyers, that trade-off is worth it.
Amortization is the process of paying off a loan with regular, equal payments over a set term. Each payment is split between interest and principal, and the balance decreases over time until it reaches zero at the end of the term.
Because interest is calculated on the outstanding balance, and the balance is largest at the start. As you pay down principal, the interest portion shrinks and more of your payment goes to principal.
Yes. Most lenders allow extra principal payments, which reduce the balance faster and cut total interest. A few extra payments a year can shave years off your loan and save thousands in interest. Check with your lender for any prepayment rules.
It uses the standard amortization formula and is accurate for the principal-and-interest portion of a loan. Just remember it doesn't include taxes, insurance, fees, or closing costs.