BCBetter Calculators

Loan Calculator

Calculate monthly payments, total interest, and payoff time for any standard loan.

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Enter your values and click Calculate

How It Works

The standard amortization formula calculates your fixed monthly payment: M = P × r(1 + r)^n / [(1 + r)^n − 1], where P is the loan principal, r is the monthly interest rate (annual APR ÷ 12), and n is the total number of monthly payments. This formula ensures that equal monthly payments will retire the entire balance plus interest by the final payment. When an extra monthly payment is entered, the calculator switches to a month-by-month simulation: each month it charges interest on the current balance, applies the total payment, and reduces the balance by the principal component. The simulation runs until the balance reaches zero, counting the months elapsed and summing total interest charged. The difference between the simulation results with and without the extra payment reveals the time and interest savings.

Examples

Standard 30-Year Mortgage
A $250,000 home loan at 6.5% interest over 30 years with no extra payments.
Result: Yields a $1,580.17 monthly payment and a staggering $318,861 in total interest over 30 years.
Mortgage with Extra Payments
The same $250,000 home loan at 6.5%, but adding $200 extra every month.
Result: Pays the loan off in just 22 years and 5 months, saving nearly $96,000 in interest.
5-Year Auto Loan
Financing a $30,000 car at 8% interest over 5 years.
Result: Results in a $608.29 monthly payment and $6,497.51 in total interest.

Frequently Asked Questions

What does amortization mean?
Amortization is the process of spreading a loan out into a series of fixed payments over time. Early in the loan, a larger portion of your payment goes toward interest. Later, more goes toward the principal.
Are taxes and insurance included in this calculation?
No. For mortgages, your actual monthly bill will likely be higher because lenders often bundle property taxes and homeowners insurance into an escrow account. This calculator only shows Principal and Interest (P&I).
Does applying extra payments really save that much money?
Yes! Because interest is calculated based on your remaining principal balance, making extra payments reduces the principal faster. This creates a snowball effect where you are charged less interest every subsequent month.
What happens if I have a 0% interest loan?
If your interest rate is 0%, the calculator simply divides the total loan amount by the total number of months to give you your monthly payment. You will pay $0 in interest.

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