How it works
A fixed-rate amortizing loan charges interest on the remaining balance each month. Your payment stays the same, but early payments are mostly interest and later payments are mostly principal.
Formula
M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1) r = APR ÷ 12, n = months
Example
$25,000 at 8.5% for 5 years costs about $512.91 per month and $5,775 in total interest.
Assumptions & limitations
- Fixed rate and on-time payments.
- Excludes origination fees, late fees and penalties unless entered.
Frequently asked questions
What is APR?
The annual percentage rate is the yearly cost of borrowing, including interest and some fees, expressed as a percentage.
Does paying extra help?
Yes. Extra payments go directly to principal, which reduces total interest and shortens the loan.