How do I calculate a monthly loan payment?

A standard amortizing loan payment spreads principal and interest into equal monthly amounts over a fixed term. The inputs you need are the loan amount (principal), the annual interest rate, and the number of months in the term.

Convert the annual rate to a monthly rate by dividing by 12. A 6% annual rate becomes 0.06 ÷ 12 = 0.005 per month. Convert years to months the same way: a 5-year loan is 60 months.

The payment formula

The usual payment formula is:

M = P × [r(1 + r)^n] ÷ [(1 + r)^n − 1]

Here, M is the monthly payment, P is principal, r is the monthly rate, and n is the number of payments. If the rate is zero, the payment is simply P ÷ n.

Worked example

On a $10,000 loan at 6% annual interest for 3 years, r = 0.005 and n = 36. The formula gives a monthly payment of about $304.22. Over the full term you repay more than $10,000 because interest is included in each installment.

Extra fees can change what you actually pay. Origination fees, mandatory insurance, or points may raise the amount financed or effective cost. Compare offers using the same principal, term, and fee assumptions.

Biweekly payments and round-up programs may shorten payoff time when extra cash goes to principal, but they do not change the contractual monthly figure unless the loan is amended.

Online results are estimates. Credit approval, compounding conventions, and day-count methods can shift the first bill slightly. Read the lender's disclosure before signing.

For side-by-side estimates across loans, mortgages, and savings scenarios, browse the quickcalculators.org hub.