PMT = P·r/(1−(1+r)^−n) for a fully amortizing loan.
A loan payment calculator tells you how much you will pay each month for a loan, given the amount you borrow, the interest rate, and the repayment period. It is used for car loans, personal loans, student loans, and any other fixed-term loan with a fixed rate and equal monthly payments. It tells you the exact monthly figure and shows how much goes toward interest over the life of the loan.
The calculator also shows the total amount you will repay and the total interest. These two figures often reveal more than the monthly payment alone: a loan with small monthly payments can still cost a great deal in interest if it runs for many years.
The calculator uses the standard amortizing-loan formula, which assumes that every payment is the same size and that each payment first covers the interest due for that month, with the rest reducing the loan balance:
M = P × r(1+r)^n / ((1+r)^n − 1), where M is the monthly payment, P is the loan principal (the amount borrowed), r is the monthly interest rate (the annual rate divided by 12), and n is the total number of monthly payments.
This formula guarantees that the final payment brings the balance exactly to zero. The term length affects both the payment and the total interest. A shorter term raises the monthly payment but lowers the total interest, because the balance shrinks sooner and fewer months of interest are charged. A longer term does the opposite: smaller monthly payments, but more interest paid overall.
For example, stretching a loan over more years does not change the interest rate, yet the total interest can easily double, because interest accrues on the outstanding balance every month until the loan is gone.
In this example, suppose you borrow $25,000 at an assumed annual rate of 6% (assumed for illustration) with a 5-year term. The monthly rate is 0.06 ÷ 12 = 0.005, and the number of payments is 5 × 12 = 60. Applying the formula:
M = 25,000 × 0.005 × (1.005)^60 / ((1.005)^60 − 1) ≈ $483.32 per month
Over 60 payments, the total repaid is 60 × $483.32 ≈ $28,999, of which about $3,999 is interest. If the same loan ran for 7 years instead, the monthly payment would fall to about $365, but total interest would rise to roughly $5,678 — a reminder of how term length trades a smaller payment for a higher total cost.
The loan amount first, then the interest rate, then the term — a longer term lowers the payment but raises total interest.
Yes — EMI (equated monthly instalment) is the same amortizing-payment math.
