Loan Repayment Calculator
Enter loan amount, annual interest rate and loan term in years. The calculator shows monthly payment, interest costs, total payment and payback ratio.
Monthly payment
Total interest
Total repayment
Repayment multiplier
Loan Repayment Calculator — Monthly Payments and Total Interest
The loan repayment calculator shows your monthly payment, total interest cost, and amortization breakdown for any loan amount, interest rate, and term. Whether you are shopping for a mortgage, auto loan, or personal loan, this tool helps you compare scenarios before committing.
How Is the Monthly Payment Calculated?
The calculator uses the annuity method (also called a fixed-rate amortization), where the monthly payment stays the same throughout the loan term. In the early years, most of each payment goes toward interest; in later years, the balance shifts toward principal repayment.
Formula:
Monthly payment = P × [r(1+r)^n] / [(1+r)^n − 1]
Where:
- P = loan principal (amount borrowed)
- r = monthly interest rate (annual rate ÷ 12)
- n = total number of monthly payments
Example: $250,000 mortgage at 6.5% for 30 years:
r = 0.065 / 12 = 0.005417, n = 360
Monthly payment = $250,000 × [0.005417 × (1.005417)^360] / [(1.005417)^360 − 1] = $1,580
Total paid over 30 years: $1,580 × 360 = $568,800 — meaning you pay $318,800 in interest on a $250,000 loan.
Impact of Interest Rate on Total Cost
| Loan Amount | Interest Rate | Term | Monthly Payment | Total Interest |
|---|---|---|---|---|
| $200,000 | 5.0% | 30 yr | $1,074 | $186,512 |
| $200,000 | 6.5% | 30 yr | $1,264 | $255,088 |
| $200,000 | 7.5% | 30 yr | $1,398 | $303,435 |
| $300,000 | 6.5% | 30 yr | $1,896 | $382,633 |
| $300,000 | 6.5% | 15 yr | $2,613 | $170,389 |
Notice: shortening the term from 30 to 15 years raises the monthly payment but cuts total interest by more than half.
Payback Ratio
The payback ratio tells you how many times over you repay the original loan amount:
Payback ratio = total payments ÷ loan amount
A ratio of 2.0 means you pay back double what you borrowed. The higher the interest rate and the longer the term, the higher this ratio — and the more you pay in interest.
Fixed-Rate (Annuity) vs. Adjustable-Rate Loans
- Fixed-rate (annuity): Monthly payment stays the same for the life of the loan. Budgeting is predictable.
- Adjustable-rate (ARM): Rate changes after an initial fixed period (e.g., 5/1 ARM = fixed for 5 years, then adjusts annually). Lower initial payments but risk of increases.
- Equal principal repayment: The principal portion is constant each month, but total payment decreases over time as interest shrinks. Lower total interest cost.
This calculator uses the fixed-rate annuity method, which is the most common for mortgages and auto loans in the US.
Tips for Borrowers
- Compare the APR, not just the rate — APR includes fees and points, giving a truer cost picture.
- Shorter term = huge savings — A 15-year mortgage at the same rate saves tens of thousands vs. 30 years.
- Extra payments — Even $100/month extra toward principal can shave years off a mortgage.
- Avoid payment holidays unless necessary — Interest still accrues during deferment.
- Check for prepayment penalties — Some loans charge fees for paying off early.
- Lock your rate — When applying for a mortgage, a rate lock protects you from increases during processing.
Frequently Asked Questions
What is a good mortgage interest rate?
Rates depend on the economic environment, your credit score, down payment, and loan type. As of 2024, rates between 6–7% are common for 30-year fixed mortgages. A credit score above 740 typically qualifies for the best rates.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but significantly lower total interest. Choose 15 years if you can comfortably afford the payments; otherwise, choose 30 years and make extra payments when possible.
How does my credit score affect my rate?
Lenders offer lower rates to borrowers with higher credit scores because they represent less risk. A difference of 1 percentage point on a $300,000 mortgage can cost over $60,000 in additional interest over 30 years.
What is PMI?
Private Mortgage Insurance (PMI) is required when your down payment is less than 20%. It typically costs 0.5–1% of the loan amount annually and can be removed once you reach 20% equity.
Related Tools
- Installment Calculator — Calculate total costs of installment purchases
- Compound Interest Calculator — See how investments grow over time
- Investment Return Calculator — Calculate ROI and annual return
- Percentage Calculator — Work out interest rate differences
- Net Salary Calculator — See how much you take home for loan affordability
Sources
- Consumer Financial Protection Bureau: Mortgage Basics
- Federal Reserve: Consumer Credit
- Freddie Mac: Primary Mortgage Market Survey