How the calculation works
Payment = P × r / (1 − (1 + r)^−n). P is principal, r is the annual interest rate divided by 1,200, and n is the number of monthly payments. At zero interest, divide principal by n.
Work through an example
Borrowing $10,000 at 6% annual interest over 36 months gives a scheduled payment of about $304.22. Total interest is about $951.90. An extra payment reduces the balance sooner, so the loan finishes earlier and less interest accrues.
Assumptions and limitations
Payments are monthly and in arrears. Interest uses the outstanding balance and a constant nominal annual rate. Amounts are calculated at full precision and rounded only for display. Origination fees, daily accrual, insurance, variable rates, and prepayment penalties are excluded.
The displayed defaults are examples, not live rates. Results are before tax unless explicitly stated. Figures are calculated at full precision, with amounts rounded for display, so adding displayed rows may differ by a small rounding amount.
Questions about this calculator
Can I use this for an auto loan?
It estimates repayment for a fixed-rate monthly loan. Include financed fees in principal yourself; sales tax, trade-ins, and dealer rebates do not have dedicated inputs here.
Why might the lender's payment differ?
Fees, interest accrual dates, payment dates, and rounding may differ from this simplified monthly model.
Keep the comparison useful
Save one calculation before changing an input. Keep the other assumptions fixed, then compare the result with the saved calculation. For borrowing, look at the total interest and repayment time as well as the scheduled payment. For investing, compare contributions with growth and remember that a constant return is only an illustration.
The table provides the numerical checkpoints behind the chart. Download it as CSV if you want to inspect the values elsewhere. A comparison stays in this tab only and is lost when you reload. No account is needed.
Background reading: CFPB: interest rate and APR. Our calculator, worked examples, and explanations are created for SumHatch; the linked organisation does not endorse this tool.
Methodology updated November 10, 2026.