Loan Payment Calculator
Estimate your loan payments, total interest and total repayment using a reducing balance amortization method.
Enter Your Loan Details
Enter the loan amount, annual interest rate and repayment term.
Your Results Will Appear Here
Enter your loan details to estimate your payment and total interest.
How to Calculate Loan Payments
This calculator uses the reducing balance method, also known as an amortizing loan. Interest is calculated on the outstanding loan balance for each payment period.
Loan Payment Formula
Periodic Rate = Annual Interest Rate ÷ Payments per Year
Number of Payments = Loan Term × Payments per Year
Payment = Principal × Rate ÷ (1 − (1 + Rate)−Number of Payments)
When the interest rate is 0%, each payment equals the loan amount divided by the total number of payments.
Calculation Example
Suppose you borrow $10,000 at an annual interest rate of 6% for 5 years, with monthly payments.
- Loan amount: $10,000.
- Annual interest rate: 6%.
- Loan term: 5 years.
- Payment frequency: 12 times per year.
- Total number of payments: 60.
- Estimated monthly payment: approximately $193.33.
Frequently Asked Questions
What is a reducing balance loan?
A reducing balance loan calculates interest on the outstanding principal. As the principal decreases, the interest portion of each payment generally decreases.
Does this calculator support zero interest loans?
Yes. When the annual interest rate is zero, the loan amount is divided equally across all scheduled payments.
Does the result include additional loan fees?
No. The estimate excludes origination fees, insurance, taxes, late charges and other lender-specific costs.
Are the payment frequency options exact lender schedules?
The calculator uses 12 monthly, 26 bi-weekly or 52 weekly payment periods per year. Actual lender schedules, day-count conventions and rounding may differ.
Important: This is an estimate for planning purposes, not a loan offer or lender quote.