Borrowing money, whether for a car, a home, or personal expenses, involves understanding the cost of that loan. The most common way to gauge this cost is by calculating your estimated monthly payment. This payment typically includes both the principal (the amount you borrowed) and the interest (the cost of borrowing). Our calculator helps you estimate this figure quickly and easily.
How is the Monthly Payment Calculated?
The standard formula for calculating the fixed monthly payment (M) for an amortizing loan is as follows:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment
P = The principal loan amount (the amount you borrowed)
i = Your monthly interest rate (your annual interest rate divided by 12)
n = The total number of payments over the loan's lifetime (your loan term in years multiplied by 12)
Example Calculation:
Let's say you're taking out a loan with the following terms:
Loan Amount (P): $20,000
Annual Interest Rate: 5.5%
Loan Term: 5 Years
First, we need to convert these to the values used in the formula:
Total Number of Payments (n): 5 years * 12 months/year = 60
Now, plugging these into the formula:
M = 20000 [ 0.0045833(1 + 0.0045833)^60 ] / [ (1 + 0.0045833)^60 – 1]
M = 20000 [ 0.0045833 * (1.0045833)^60 ] / [ (1.0045833)^60 – 1]
M = 20000 [ 0.0045833 * 1.31570 ] / [ 1.31570 – 1]
M = 20000 [ 0.006035 ] / [ 0.31570 ]
M = 20000 * 0.019116
M ≈ $382.32
So, the estimated monthly payment for this loan would be approximately $382.32.
Why Use a Monthly Loan Payment Calculator?
Budgeting: Understand how a loan fits into your monthly budget.
Comparison Shopping: Compare loan offers from different lenders. A lower monthly payment might be more attractive, but also compare the total interest paid over the life of the loan.
Financial Planning: Make informed decisions about taking on new debt.
Understanding Loan Amortization: See how each payment gradually reduces your principal balance.
This calculator provides an estimate for the principal and interest portion of your loan payment. It does not include potential additional costs like property taxes, homeowner's insurance (for mortgages), or loan origination fees, which can increase your total monthly outlay. Always review the full loan terms provided by your lender.
function updateRateSliderValue() {
var slider = document.getElementById("rateSlider");
var output = document.getElementById("rateSliderValue");
output.innerHTML = parseFloat(slider.value).toFixed(2) + "%";
document.getElementById("annualInterestRate").value = slider.value;
}
function updateTermSliderValue() {
var slider = document.getElementById("termSlider");
var output = document.getElementById("termSliderValue");
output.innerHTML = slider.value + " Years";
document.getElementById("loanTermYears").value = slider.value;
}
var rateSlider = document.getElementById("rateSlider");
rateSlider.oninput = function() {
updateRateSliderValue();
};
updateRateSliderValue(); // Initialize slider value display
var termSlider = document.getElementById("termSlider");
termSlider.oninput = function() {
updateTermSliderValue();
};
updateTermSliderValue(); // Initialize slider value display
function calculateMonthlyPayment() {
var principal = parseFloat(document.getElementById("loanAmount").value);
var annualRate = parseFloat(document.getElementById("annualInterestRate").value);
var years = parseInt(document.getElementById("loanTermYears").value);
var resultValueElement = document.getElementById("result-value");
var resultDetailsElement = document.getElementById("result-details");
if (isNaN(principal) || principal <= 0) {
resultValueElement.innerHTML = "Invalid";
resultDetailsElement.innerHTML = "Please enter a valid loan amount.";
return;
}
if (isNaN(annualRate) || annualRate < 0) {
resultValueElement.innerHTML = "Invalid";
resultDetailsElement.innerHTML = "Please enter a valid annual interest rate.";
return;
}
if (isNaN(years) || years <= 0) {
resultValueElement.innerHTML = "Invalid";
resultDetailsElement.innerHTML = "Please enter a valid loan term in years.";
return;
}
var monthlyRate = annualRate / 100 / 12;
var numberOfPayments = years * 12;
var monthlyPayment = 0;
if (monthlyRate === 0) {
monthlyPayment = principal / numberOfPayments;
} else {
monthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
resultValueElement.innerHTML = "Error";
resultDetailsElement.innerHTML = "Calculation resulted in an error. Please check your inputs.";
} else {
var formattedMonthlyPayment = monthlyPayment.toFixed(2);
resultValueElement.innerHTML = "$" + formattedMonthlyPayment;
resultDetailsElement.innerHTML = "Based on a loan of $" + principal.toLocaleString() +
" at " + annualRate.toFixed(2) + "% annual interest over " + years + " years (" + numberOfPayments + " payments).";
}
}