Payment Calculator
Calculate loan payments for any type of loan with flexible terms and payment frequencies. Compare monthly, bi-weekly, and weekly payment options to find the best strategy for your budget.
Payment Calculator
Calculate loan payments for any type of loan with flexible terms and payment frequencies
How to Calculate Loan Payments
Quick Answer: Loan payments depend on the principal amount, interest rate, and loan term. For a $100,000 loan at 6.5% for 5 years, your monthly payment would be approximately $1,956.
The payment calculation uses compound interest and ensures that your loan is fully paid off by the end of the term. More frequent payments (bi-weekly or weekly) can reduce total interest costs.
Payment Frequency Comparison
How payment frequency affects your loan costs
| Payment Frequency | Payment Amount | Payments per Year | Total Interest | Time Saved |
|---|---|---|---|---|
| Monthly | $1,956.10 | 12 | $17,366.02 | - |
| Bi-weekly | $978.05 | 26 | $15,847.23 | 6 months |
| Weekly | $489.03 | 52 | $15,234.45 | 8 months |
*Based on $100,000 loan at 6.5% APR for 5 years. More frequent payments reduce total interest and loan term.
Loan Payment Formula
Understanding how loan payments are calculated
The Standard Loan Payment Formula
Where:
- M = Monthly payment
- P = Principal loan amount
- r = Periodic interest rate (annual rate ÷ payments per year)
- n = Total number of payments
Step-by-Step Example:
Loan Amount: $100,000
Annual Interest Rate: 6.5%
Loan Term: 5 years (60 months)
Step 1: Convert annual rate to monthly rate
r = 6.5% ÷ 12 = 0.5417% = 0.005417
Step 2: Calculate total number of payments
n = 5 years × 12 months = 60 payments
Step 3: Apply the formula
M = $100,000 × [0.005417 × (1.005417)^60] / [(1.005417)^60 - 1]
M = $100,000 × 0.019561 = $1,956.10
How Loan Term Affects Payments
Payment comparison for different loan terms
2 Years
$4,486.36
Monthly payment
Total interest: $7,672.64
3 Years
$3,090.68
Monthly payment
Total interest: $11,264.48
5 Years
$1,956.10
Monthly payment
Total interest: $17,366.02
10 Years
$1,135.59
Monthly payment
Total interest: $36,270.80
*Based on $100,000 loan at 6.5% APR. Shorter terms have higher payments but lower total interest.
Frequently Asked Questions
Common questions about loan payment calculations
How do I calculate loan payments?
Loan payments are calculated using the formula: M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1 ], where M is the payment, P is the principal, r is the periodic interest rate, and n is the number of payments. This calculator handles monthly, bi-weekly, and weekly payment frequencies.
What's the difference between payment frequencies?
Monthly payments are made 12 times per year, bi-weekly payments are made 26 times per year (every two weeks), and weekly payments are made 52 times per year. More frequent payments can reduce total interest paid and shorten the loan term.
Should I make bi-weekly payments instead of monthly?
Bi-weekly payments can save you money on interest and pay off your loan faster. Since you make 26 bi-weekly payments per year (equivalent to 13 monthly payments), you pay down the principal faster, reducing total interest costs.
Can I use this calculator for any type of loan?
Yes, this payment calculator works for any installment loan including personal loans, student loans, auto loans, mortgages, and business loans. Simply enter the loan amount, interest rate, and term to get your payment amount.
How accurate are the payment calculations?
The calculations use standard financial formulas and are highly accurate for installment loans with fixed interest rates. For variable rate loans or loans with fees, consult with your lender for exact payment amounts.
What factors affect my loan payment?
Your loan payment is affected by the principal amount (loan size), interest rate, loan term (length), and payment frequency. Higher loan amounts and interest rates increase payments, while longer terms and more frequent payments can decrease individual payment amounts.
Can I pay off my loan early?
Most loans allow early payoff, which can save you money on interest. Check your loan agreement for any prepayment penalties. Making extra principal payments or switching to more frequent payment schedules can help you pay off loans faster.
How do I reduce my loan payments?
You can reduce loan payments by: extending the loan term (though this increases total interest), refinancing to a lower interest rate, making a larger down payment, or improving your credit score to qualify for better rates.
Smart Payment Strategies
To Reduce Total Interest
- • Make bi-weekly instead of monthly payments
- • Add extra principal to each payment
- • Choose shorter loan terms when possible
- • Refinance to lower interest rates
- • Make one extra payment per year
To Lower Monthly Payments
- • Extend the loan term (increases total interest)
- • Improve credit score before applying
- • Shop around for better interest rates
- • Consider a co-signer for better rates
- • Make a larger down payment
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