How loan payments are calculated
Most loans are amortizing: every monthly payment is the same, but early payments are mostly interest and later payments mostly principal. The payment is P × r ÷ (1 − (1 + r)−n), where P is the amount borrowed, r the monthly rate and n the number of payments.
How to pay less interest
- Choose a shorter term — the monthly payment is higher but total interest drops sharply.
- Make extra payments toward principal whenever you can.
- Improve your credit score before applying to qualify for a lower rate.
Frequently asked questions
Is this financial advice?
No. Results are estimates for planning purposes. Your lender’s actual offer may differ because of fees, rounding and the exact rate.
What is APR vs interest rate?
The interest rate is the cost of borrowing the principal. APR also includes fees, so it is a better number for comparing offers. Enter the APR here for a more realistic total.