What Is My Monthly Payment Calculator

Monthly Payment Formula:

\[ Payment = P \times \frac{r(1+r)^n}{(1+r)^n - 1} \]

Monthly Payment:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What Is Monthly Payment Calculator?

The Monthly Payment Calculator helps you determine your fixed monthly payment for a loan using the standard amortization formula. It calculates how much you'll pay each month based on the loan amount, interest rate, and loan term.

2. How Does the Calculator Work?

The calculator uses the amortization formula:

\[ Payment = P \times \frac{r(1+r)^n}{(1+r)^n - 1} \]

Where:

$ P $ — Principal loan amount ($)
$ r $ — Monthly interest rate (annual rate ÷ 12)
$ n $ — Total number of payments (loan term in years × 12)

Explanation: This formula calculates the fixed monthly payment required to fully pay off a loan over its term, including both principal and interest components.

3. Importance of Monthly Payment Calculation

Details: Knowing your exact monthly payment helps with budgeting, comparing loan offers, understanding total loan cost, and making informed financial decisions about borrowing.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate as a percentage, and loan term in years. All values must be positive numbers with valid ranges.

5. Frequently Asked Questions (FAQ)

Q1: What is included in the monthly payment?
A: The monthly payment includes both principal repayment and interest charges, calculated to ensure the loan is fully paid off by the end of the term.

Q2: How does interest rate affect my payment?
A: Higher interest rates increase your monthly payment and total loan cost. Even a small rate difference can significantly impact your payments over time.

Q3: What is amortization?
A: Amortization is the process of paying off a loan through regular payments that cover both principal and interest, with the interest portion decreasing over time.

Q4: Can I calculate payments for different loan types?
A: This calculator works for fixed-rate installment loans like mortgages, auto loans, and personal loans. It may not be suitable for variable-rate or interest-only loans.

Q5: How accurate is this calculator?
A: The calculator provides accurate estimates for standard fixed-rate loans. Actual payments may vary slightly due to rounding differences or additional fees.