Finance
Payment Calculator
Works a periodic payment, where the frequency affects the total.
Result
Assumes a fixed rate and equal payments with no fees or deposit. Dealer and equipment finance often bundles fees into the amount financed, include them in the amount above.
Get a Free Business AuditHow the calculation works
The amortisation formula applied at the chosen payment frequency, with the periodic rate and the number of periods adjusted accordingly. Paying more frequently reduces the average outstanding balance slightly and therefore the total interest, which is a small effect that compounds over a long term.
What moves the number
- Principal, rate and term.
- Payment frequency.
- Whether extra payments reduce principal.
- Any fees outside the rate.
Where this one goes wrong
A payment that fits the budget is not the same as a loan that makes sense, and the arithmetic will happily produce an affordable payment on a term that costs far more in total. Look at both figures. Where extra payments are allowed, applying them to principal rather than to future payments is what actually shortens the term, and that distinction has to be confirmed with the lender rather than assumed.
Before you quote
- Look at total cost alongside the payment.
- Confirm extra payments are applied to principal.
- Match the periodic rate to the payment frequency.
Questions
About this calculator
Does paying more frequently save money?
A small amount, because it reduces the average outstanding balance slightly. The effect is modest and compounds over a long term, and it is much smaller than the effect of paying extra against principal.
How do extra payments shorten a loan?
Only when applied to principal rather than held against future payments. Some lenders do the latter by default, which reduces the next payment rather than the term, so it is worth confirming how they will be applied.
Is an affordable payment a good loan?
Not necessarily. The arithmetic will produce an affordable payment on a term that costs far more in total, which is why the payment and the total cost should be looked at together rather than one at a time.
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How to use this calculator
- Amount financed ($). Enter your own figure; the page starts at $12,000.
- Annual interest rate (%). Enter your own figure; the page starts at 9.9%.
- Term in years. Enter your own figure; the page starts at 3.
- Payment you can afford ($). Used to work out how much that payment would borrow.
The result updates as you type, so you can try a figure, see what it does to monthly payment, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Amount financed | $12,000 |
| Annual interest rate | 9.9% |
| Term in years | 3 |
| Payment you can afford | $400 |
What comes out
| Result | Value |
|---|---|
| Monthly payment main result | $386.64 |
| What your budget would borrow | $12,415 |
| Total interest | $1,919 |
| Total repaid | $13,919 |
That works out at $386.64 a month. A budget of 400 a month would finance about $12,415 on the same terms.
How sensitive the answer is
Holding everything else steady and changing only amount financed, this is what happens to monthly payment. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Amount financed ($) | Monthly payment |
|---|---|
| $6,000 | $193.32 |
| $9,000 | $289.98 |
| $12,000 example above | $386.64 |
| $18,000 | $579.96 |
| $24,000 | $773.29 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Amount financed ($)
- A money amount, starting at $12,000.
- Annual interest rate (%)
- A percentage, between 0 and 100, starting at 9.9%.
- Term in years
- A number, between 0 and 40, starting at 3.
- Payment you can afford ($)
- Used to work out how much that payment would borrow.
What the results tell you
| Result | What it is |
|---|---|
| Monthly payment | The headline result. A money figure. |
| What your budget would borrow | A money figure. |
| Total interest | A money figure. |
| Total repaid | A money figure. |
Rates and terms move
Loan and interest figures assume the rate and term you enter hold for the whole period. Variable rates, fees rolled into the balance and early-repayment terms all change the real cost.
Keep going
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