How loan repayments are calculated
This calculator uses the standard amortizing-loan formula. Each month you pay interest on the remaining balance plus a slice of principal, so early payments are mostly interest and later ones are mostly principal.
Worked example. A $20,000 loan at 7.5% over 5 years works out to about $400.76/month. You repay roughly $24,046 in total, about $4,046 in interest. Cutting the term to 3 years raises the monthly payment but slashes total interest.
The formula
Monthly payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r is the monthly rate (annual ÷ 12 ÷ 100), and n is the number of months.
Country notes
Rate conventions differ: most US/UK consumer loans quote an APR that already reflects compounding. Some markets quote a flat or “add-on” rate, which makes the real cost higher than it looks. Always compare the APR, not the headline rate.