Align the time units
P is the amount borrowed, i is the monthly interest rate, and N is the number of monthly payments. For a nominal annual percentage rate used by this model, divide the percentage by 1200 to obtain i.
A three-year term has 36 monthly payments. The calculator requires a term that converts to a whole number of months.
Why a fixed payment changes its composition
At each period, interest is based on the outstanding balance. Early payments usually contain more interest; as principal declines, a larger portion of the same payment reduces principal.
The formula assumes regular payments at the end of each monthly period. Multiply the payment by the payment count for total modeled repayment, then subtract the original principal for total interest.
Compare estimates on equal assumptions
A longer term can reduce the monthly payment while increasing total interest. Compare both outputs using the same principal and stated rate.
Origination fees, irregular payment dates, variable rates, early repayments and lender rounding rules are outside this tool. Zero interest uses principal divided by payment count instead of the interest-bearing formula.
LET’S WORK IT THROUGH
Borrow 1,200 at zero interest and repay it over one year. What is the monthly amount?
- One year contains 12 monthly payments.
- With no interest, divide principal by payment count.
- 1,200 ÷ 12 = 100.
THE ANSWER100 per month; total repayment 1,200 and interest 0.
YOUR TURN
A small check for understanding.
A payment is 250 for 24 months on principal 5,000. What is the total interest in that schedule?
Reveal the answer
1,000, assuming no separate fees: 250 × 24 − 5,000.
Now try your own numbers.
The loan repayment includes input guidance and the limits of its supported calculations. Use it alongside the method above.
Open Loan repayment ↗A note on precision: preserve exact fractions where possible and round numerical results at the end. Found an unclear step? Prepare a correction report.