What this loan calculator does
This tool works out the fixed monthly payment on a loan using French amortization — the method behind most personal, auto, and mortgage loans. Enter three numbers (amount, annual interest rate, and term) and you’ll see what you pay each month, what you pay back in total, and how much of that is interest. A year-by-year amortization table shows how the balance shrinks over time.
Everything runs in your browser: this is an informational estimate, not a credit application.
How to use it
- Loan amount: the sum you plan to borrow or have already been approved for.
- Annual interest rate: the yearly rate your lender charges. If you’re quoted a monthly rate, multiply it by 12.
- Term: how long you’ll be paying. Use the selector to enter the number in years or in months.
- Read the monthly payment, total paid, and total interest, then open the table to see, year by year, how much of your payments goes to interest and how much reduces the debt.
How French amortization works
The payment stays the same every month, but its makeup changes. Early on the outstanding balance is large, so most of the payment covers interest and only a little reduces the principal. As the balance falls, each month’s interest shrinks and a bigger slice pays down the debt. By the final payments, almost everything reduces principal.
The monthly payment formula is:
M = P × i × (1 + i)^n ÷ ((1 + i)^n − 1)
where P is the amount borrowed, i is the monthly rate (the annual rate divided by 12), and n is the total number of months. If the rate is 0%, the payment is simply P ÷ n.
Worked example
A loan of 20,000 at 10% per year over 5 years (60 months):
- Monthly rate:
i = 0.10 ÷ 12 = 0.008333 - Monthly payment:
M ≈ 424.94 - Total paid:
424.94 × 60 ≈ 25,496 - Total interest:
25,496 − 20,000 ≈ 5,496
In the first payment, about 166.67 of that 424.94 is interest and only 258.27 reduces the balance. In the final payment the split is reversed.
How the payment changes with the term
Same 20,000 loan at 10%, across different terms:
| Term | Monthly payment | Total paid | Total interest |
|---|---|---|---|
| 2 years | 922.90 | 22,149.56 | 2,149.56 |
| 3 years | 645.34 | 23,232.37 | 3,232.37 |
| 4 years | 507.25 | 24,348.08 | 4,348.08 |
| 5 years | 424.94 | 25,496.45 | 5,496.45 |
| 6 years | 370.52 | 26,677.21 | 6,677.21 |
A longer term lowers the monthly payment but raises the total interest paid.
Nominal rate, APR, and paying less
Lenders often advertise a nominal rate. The true cost — including fees, insurance, and compounding — is captured better by the annual percentage rate (APR). When comparing offers, always ask for the APR. Personal loan rates in the Dominican Republic and much of Latin America tend to run higher than in the United States or Europe; check current terms with your own bank.
To pay less interest: make extra payments toward principal when you can, pick the shortest term your budget allows, and compare the APR, not just the monthly payment.
Frequently asked questions
Why is almost all of the early payments interest?
Because each month’s interest is charged on the remaining balance, and at the start that balance is highest. Since the payment is fixed, when interest is large there’s little left to reduce principal. As the balance falls month by month, interest drops and you pay down more of the debt.
Is a shorter or longer term better?
It depends on your budget. A shorter term has higher payments but less total interest; a longer term eases the monthly payment but costs more overall. The table above shows that trade-off.
What happens if I pay extra toward the principal?
Every extra payment reduces the balance directly, so from that month on, interest is charged on a smaller debt. That can shorten the term or lower future payments. Ask whether your loan allows principal prepayments without a penalty.
What’s the difference between a fixed and a variable rate?
With a fixed rate your payment stays the same for the whole loan, giving you predictability. With a variable rate it can rise or fall with a reference index: it may start cheaper but carries uncertainty. This calculator assumes a fixed rate.
Is the result exact?
It’s an informational estimate. Real terms depend on your lender: fees, insurance, payment dates, and rounding can change the payment. This is not financial advice — always confirm the figures with the institution issuing the loan.