SlothLab ToolsLoan Repayment Calculator
Calculate monthly payments, total interest, and view amortization schedule for any loan.
$
%
$
30 years
Monthly Payment
Monthly Payment
$1,580.17
Total Payment
$568,862
Total Interest
$318,862
Interest / Principal
128%
Effective Term
360 months
Principal vs Interest
Principal: $250,000
Interest: $318,862
Amortization Schedule
Month 1Month 360
PrincipalInterest
Last Updated: March 16, 2026
How It Works
The monthly payment is calculated using the standard amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. This formula ensures that each equal payment covers both the interest owed on the remaining balance and a portion of the principal. In the early months, a larger share of each payment goes toward interest because the outstanding balance is highest. As payments progress and the balance decreases, the interest portion shrinks and the principal portion grows — this shifting ratio is the defining characteristic of amortization. Extra payments go directly to reducing the principal balance, which means less interest accrues in all subsequent months, effectively shortening the loan term and reducing total interest paid over the life of the loan.
Why This Matters
For most people, a mortgage or auto loan is the single largest financial commitment they will ever make. On a typical 30-year, $300,000 mortgage at 6.5%, you will pay approximately $382,633 in interest alone — more than the original loan amount. Yet studies consistently show that most borrowers cannot accurately estimate how much total interest they will pay, and many do not understand how the amortization structure front-loads interest payments.
This knowledge gap has real financial consequences. Borrowers who do not understand amortization may not realize that making even small extra payments in the first 5-10 years of a loan has an outsized impact on total interest. A $100 extra monthly payment on the loan above saves approximately $62,000 in total interest and pays off the loan 4.5 years early. Without this understanding, the incentive to make extra payments when they matter most — early in the loan term — is invisible.
Understanding your amortization schedule also empowers better refinancing decisions. If you are 10 years into a 30-year mortgage, you have already paid the majority of the interest; refinancing into a new 30-year loan restarts the amortization clock and may cost more in total despite a lower rate. This calculator makes the math transparent so you can make informed decisions about your largest financial obligations.
Real-World Examples
Scenario 1 — First-time homebuyer: Maria is purchasing a $350,000 home with 20% down ($70,000), financing $280,000 at 6.75% for 30 years. Her monthly payment is $1,816. Over the full term, she will pay $373,735 in total interest. By adding $250/month in extra payments, she reduces total interest to $249,842 (saving $123,893) and pays off the loan in about 22 years instead of 30.
Scenario 2 — Auto loan comparison: David is financing a $35,000 car and comparing a 48-month loan at 5.9% versus a 72-month loan at 6.5%. The 48-month option costs $822/month with $4,469 in total interest. The 72-month option is only $583/month but costs $6,993 in total interest — $2,524 more. Additionally, the longer loan risks being 'underwater' (owing more than the car is worth) for a longer period.
Scenario 3 — Refinancing decision: The Johnsons are 8 years into a 30-year, $250,000 mortgage at 7.25%. Their remaining balance is $222,000 and they have already paid $139,000 in interest. They are offered a refinance at 5.5% for a new 30-year term. While the new payment drops from $1,706 to $1,261, the new total interest over 30 years would be $231,960. Using this calculator, they compare a 20-year refinance instead ($1,531/month, $145,351 total interest), which saves significantly more overall.
Methodology & Sources
This calculator uses the standard amortization formula for fixed-rate loans: M = P × [r(1+r)^n] / [(1+r)^n - 1], where M is the monthly payment, P is the principal loan amount, r is the monthly interest rate (annual rate / 12), and n is the total number of monthly payments. This formula is derived from the present value of an annuity equation and ensures that a series of equal payments fully repays the principal plus all accrued interest over the loan term.
The amortization schedule breaks each payment into principal and interest components using the iterative method: Interest_n = Balance_{n-1} × r, and Principal_n = M - Interest_n. The remaining balance after each payment is Balance_n = Balance_{n-1} - Principal_n. Early payments are predominantly interest (for a typical 30-year mortgage at 6.5%, the first payment is ~85% interest), while later payments are predominantly principal — this is the natural mathematical consequence of interest being calculated on a declining balance.
Total interest paid = (Monthly Payment × Number of Payments) - Principal. The calculator also models extra monthly payments by applying them entirely to principal reduction, recalculating the amortization schedule to show reduced total interest and shortened loan term. The marginal value of extra payments is highest in the early years of the loan when the principal balance (and thus interest charges) are largest.
This formula applies to standard amortizing loans including fixed-rate mortgages, auto loans, personal loans, and student loans with fixed interest rates. The mathematical framework dates to the development of compound interest theory in the 17th century, formalized by financial mathematicians including Abraham de Moivre and refined into the modern amortization tables used universally in banking.
Comparative methods: Adjustable-rate mortgages (ARMs) use the same formula but recalculate the rate periodically. Interest-only loans calculate payments as simply Balance × r with no principal reduction. Graduated payment mortgages start with lower payments that increase over time. Each serves different financial situations, but the standard fixed-rate amortization modeled here remains the most common loan structure in the United States.
Limitations: This calculator assumes a fixed interest rate for the entire loan term. Adjustable-rate mortgages (ARMs), variable-rate loans, and loans with balloon payments require different calculations. The calculator does not account for taxes, homeowner's insurance, PMI (Private Mortgage Insurance, typically required when down payment is less than 20%), HOA fees, or other costs that may be included in actual monthly housing payments. Prepayment penalties, which some loans impose for early payoff, are not included. Biweekly payment strategies (26 half-payments per year, effectively making 13 full payments) are not modeled but can achieve similar savings to modest extra monthly payments.
Common Mistakes to Avoid
1. Comparing loans only by monthly payment: A lower monthly payment often means a longer term and dramatically more total interest. A $250,000 loan at 6.5% costs $1,580/month for 30 years ($318,861 total interest) versus $2,175/month for 15 years ($141,553 total interest). The 30-year loan costs $177,308 more in interest. Always compare total cost, not just monthly affordability.
2. Ignoring the impact of rate differences: A seemingly small difference in interest rates has an enormous compounding effect over long terms. On a $300,000 30-year mortgage, the difference between 6.0% and 6.5% is $103/month, but $37,201 in total interest. The difference between 6.0% and 7.0% is $206/month and $74,103 in total interest. Shopping for the lowest rate is one of the highest-return financial activities you can do.
3. Not making extra payments early: Due to amortization front-loading interest, extra payments in years 1-5 have roughly 3-4 times the impact of the same extra payments in years 20-25. Many borrowers wait until they have more disposable income later in life, missing the period when extra payments provide the greatest return.
4. Extending the loan term when refinancing: Refinancing a 30-year mortgage that is 10 years old into a new 30-year mortgage restarts the interest clock. Even with a lower rate, you may pay more total interest by extending the payoff by 10 years. When refinancing, try to match or shorten your remaining term.
5. Forgetting about total cost of homeownership: The mortgage payment is only part of the cost. Property taxes (typically 0.5-2.5% of home value annually), homeowner's insurance ($1,000-3,000/year), maintenance (budget 1-2% of home value annually), and PMI (if applicable, 0.5-1% of loan annually) can add 30-50% to your effective monthly housing cost.
Frequently Asked Questions
How is monthly payment calculated?
Monthly payment is calculated using the amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1]. P is the loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of payments (years × 12). For example, a $250,000 loan at 6.5% for 30 years: r = 0.065/12 = 0.00542, n = 360, giving a monthly payment of approximately $1,580.17. This formula ensures each payment covers the interest due plus a portion of principal, so the loan is fully paid off at the end of the term.
Should I make extra payments on my loan?
Extra payments can save significant money and time. Even a small extra amount each month goes directly toward reducing your principal balance, which means less interest accrues in future months. For example, adding $200/month to a $250,000 loan at 6.5% can save you over $80,000 in interest and pay off the loan 7+ years early. However, check if your loan has prepayment penalties first. If you have higher-interest debt, it may be better to pay that off first.
What is amortization?
Amortization is the process of paying off a loan through regular, equal payments over a set period. Each payment is split between interest and principal, but the split changes over time. In early payments, most of the money goes toward interest because the outstanding balance is large. As you pay down the principal, less interest accrues, so a larger portion of each payment goes toward principal. This is why making extra payments early in the loan has the biggest impact — it reduces the balance that interest is calculated on for the entire remaining term.
Why do I pay so much more interest at the beginning of a loan?
In an amortizing loan, interest is calculated on the outstanding balance each month. At the start, your balance is highest, so interest charges are highest. As you pay down principal, less of each payment goes to interest and more goes to reducing the balance. For a $300,000 30-year mortgage at 6.5%, your first payment is about $1,896 — of which $1,625 is interest and only $271 reduces your principal. By the final year, almost the entire payment goes to principal.
How much can I save by making extra payments?
Extra payments can save a dramatic amount of interest because they reduce the principal balance that future interest is calculated on. For example, on a $300,000 30-year mortgage at 6.5%, adding just $200 per month to your payment saves approximately $97,000 in total interest and pays off the loan about 6 years early. Even a single extra payment per year can save tens of thousands over the life of the loan. The earlier you start making extra payments, the greater the savings.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal amount, while APR (Annual Percentage Rate) includes the interest rate plus other loan costs like origination fees, closing costs, and mortgage insurance. APR is always equal to or higher than the interest rate. For example, a mortgage with a 6.5% interest rate might have a 6.8% APR after fees are factored in. By law (Truth in Lending Act), lenders must disclose APR so borrowers can compare the true cost of different loan offers.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but saves dramatically on total interest. For a $300,000 loan at 6.5%, the 30-year option costs $1,896/month with $382,633 in total interest, while the 15-year option costs $2,613/month but only $170,388 in total interest — a savings of over $212,000. Choose 15 years if you can comfortably afford the higher payment. If cash flow is a concern, a 30-year mortgage with voluntary extra payments gives you flexibility.
How do extra payments compare to investing the difference?
This depends on your loan interest rate versus expected investment returns. If your mortgage rate is 6.5%, extra payments earn a guaranteed 6.5% return (in avoided interest). If the stock market historically returns 8-10% annually, investing might yield more — but with risk and taxes. A balanced approach often works best: build an emergency fund first, capture any employer 401(k) match, then split extra funds between loan paydown and investing. The psychological benefit of debt reduction also has value that pure math cannot capture.
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