This calculator helps you estimate the fixed monthly payment required to repay a loan over a set period. Knowing your potential monthly payment is crucial for budgeting, comparing loan offers, and understanding your financial obligations before taking out a loan. Whether it's for a car, a personal loan, or other financed purchases, this tool provides a clear financial projection.
How is the Monthly Loan Payment Calculated?
The calculation uses the standard annuity formula for loan payments. This formula ensures that each payment consists of both principal and interest, with the proportion of each changing over the life of the loan. The formula is as follows:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly payment
P = The principal loan amount (the total amount you borrow)
i = Your *monthly* interest rate. This is calculated by dividing the Annual Interest Rate by 12. For example, an annual rate of 5% becomes a monthly rate of 5% / 12 = 0.05 / 12 = 0.00416667.
n = The total number of payments over the loan's lifetime. This is calculated by multiplying the Loan Term in Years by 12. For example, a 5-year loan term means 5 * 12 = 60 payments.
Example Calculation:
Let's say you're considering a loan with the following details:
Loan Amount (P): $20,000
Annual Interest Rate: 5%
Loan Term: 5 Years
First, we convert the annual interest rate to a monthly rate (i) and the loan term in years to the total number of payments (n):
Total Number of Payments (n) = 5 years * 12 months/year = 60 payments
Now, plug these values into the formula:
M = 20000 [ 0.00416667(1 + 0.00416667)^60 ] / [ (1 + 0.00416667)^60 – 1]
M = 20000 [ 0.00416667 * (1.00416667)^60 ] / [ (1.00416667)^60 – 1]
M = 20000 [ 0.00416667 * 1.2833586 ] / [ 1.2833586 – 1]
M = 20000 [ 0.00534733 ] / [ 0.2833586 ]
M = 20000 * 0.0188712
M ≈ $377.42
So, the estimated monthly payment for this loan would be approximately $377.42.
Why Use a Monthly Loan Calculator?
Budgeting: Helps determine if a loan fits within your monthly budget.
Loan Comparison: Allows you to compare different loan offers from various lenders based on their interest rates and terms.
Financial Planning: Aids in understanding the total cost of borrowing over time.
Loan Affordability: Assesses how much you can borrow based on a desired monthly payment.
function formatCurrency(amount) {
return "$" + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
function updateSlider(numberInputId, sliderInputId) {
var numberInput = document.getElementById(numberInputId);
var sliderInput = document.getElementById(sliderInputId);
var value = parseFloat(numberInput.value);
if (!isNaN(value)) {
// Ensure slider value stays within its defined min/max
var slider = document.getElementById(sliderInputId);
if (value parseFloat(slider.max)) {
value = parseFloat(slider.max);
numberInput.value = value; // Update input if it was too high
}
slider.value = value;
}
}
function updateNumber(sliderInputId, numberInputId) {
var sliderInput = document.getElementById(sliderInputId);
var numberInput = document.getElementById(numberInputId);
numberInput.value = sliderInput.value;
}
function calculateMonthlyPayment() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyPaymentDisplay = document.getElementById("monthlyPayment");
// Input validation
if (isNaN(loanAmount) || loanAmount <= 0) {
alert("Please enter a valid loan amount.");
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
alert("Please enter a valid annual interest rate.");
return;
}
if (isNaN(loanTermYears) || loanTermYears 0) {
// Standard annuity formula
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// If interest rate is 0, payment is just principal divided by number of payments
monthlyPayment = loanAmount / numberOfPayments;
}
monthlyPaymentDisplay.textContent = formatCurrency(monthlyPayment);
}