Loan Payment Calculator
The formula behind a fixed monthly payment
Most mortgages, car loans and personal loans are amortizing loans: you repay the same amount every month, and each payment covers the interest due for that month plus a slice of the capital. The payment is:
M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
where P is the amount borrowed, r the monthly interest rate (annual rate ÷ 12 ÷ 100) and n the number of monthly payments (years × 12). If the rate is zero, the payment is simply P ÷ n.
Worked example
A €200,000 mortgage at 3.5% over 25 years:
- r = 3.5 ÷ 12 ÷ 100 = 0.0029167 per month
- n = 25 × 12 = 300 payments
- M = €1,001.25 per month
- Total repaid: 300 × 1,001.25 ≈ €300,374, so about €100,374 of interest.
How the balance goes down
In the first years most of each payment is interest; the share of capital grows over time. For the example above:
| Year | Capital repaid that year | Interest paid that year | Balance at year end |
|---|---|---|---|
| 1 | €5,096 | €6,919 | €194,904 |
| 5 | €5,861 | €6,154 | €172,641 |
| 10 | €6,980 | €5,035 | €140,058 |
| 15 | €8,313 | €3,702 | €101,253 |
| 20 | €9,900 | €2,115 | €55,039 |
| 25 | €11,790 | €225 | €0 |
After ten years — 40% of the term — you have repaid only 30% of the capital. This is why early extra repayments save so much interest. The calculator above prints this table for your own loan.
What changes the cost the most
- The rate: the same loan at 4.5% costs €1,111.66 a month, about €33,000 more over 25 years.
- The term: over 20 years at 3.5% the payment rises to €1,159.92, but total interest falls from €100,374 to €78,381.
- Fees and insurance: this calculator covers interest only. Lenders must also quote an annual percentage rate (APR) that includes arrangement fees and mandatory insurance — compare offers on APR, not on the headline rate.
A common affordability rule is to keep total loan repayments at or below roughly a third of net income; in France, lenders are capped at 35% of income, insurance included.
Frequently Asked Questions
Does the monthly payment include insurance?
No. The result covers capital and interest only. Borrower insurance, arrangement fees and guarantee costs come on top; your lender's APR includes them.
Why do I pay so much interest at the start of a loan?
Interest is charged on the outstanding balance, which is highest at the beginning. As the balance falls, the interest part of each payment shrinks and the capital part grows.
Is it better to borrow over a shorter term?
A shorter term means higher monthly payments but much less interest in total. The right choice depends on what monthly amount you can comfortably afford while keeping an emergency fund.
Can I use it for a variable-rate loan?
Only as an estimate for the current rate. If the rate changes, the payment or the term will change; rerun the calculation with the new rate and the remaining balance.