Loans and debt guide
How to Calculate Monthly Loan Payments
A fixed-rate installment payment is determined by the starting principal, periodic interest rate, and total number of payments.
Formula
Payment = principal × periodic rate ÷ (1 − (1 + periodic rate)^−number of payments). At zero interest, divide principal evenly by the number of payments.
Example
For $12,000 over 36 months at 6% APR with monthly payments, the periodic rate is 0.5%. The standard formula gives a payment of about $365.06 before any fees.
Limits
Lender fees, variable rates, payment dates, and rounding rules can change the actual schedule.
Frequently asked questions
Does the formula include fees?
The basic formula models principal and interest. Fees and other contract costs may be separate or financed.
What if the rate is zero?
Divide the principal by the number of scheduled payments.
Sources and further reading
Try the calculator
Use the Loan Payment Calculator to explore your own numbers with the assumptions shown in the tool.
Related guides
Educational content only; not individualized financial, tax, or legal advice.