Loan Payment & Amortization Calculator formula
Worked example
1,000,000 at 4% for 25 years with monthly reducing-balance payments is about 5,278 per month before fees.
How to use this calculator
- Select the loan currency and enter the principal amount.
- Enter the annual interest rate and loan term shown in the lender quote.
- Choose the payment frequency and whether the quoted interest method is reducing balance or flat rate.
- Add mandatory upfront and per-payment fees, then calculate the estimated installment, total interest and total cash outflow.
Understanding the results
Reducing-balance loans charge interest on outstanding principal, while flat-rate loans use the original principal for the term. Equal headline percentages can therefore produce very different borrowing costs.
Practical uses
Compare lender offers
Enter each lender's method, rate and mandatory fees instead of comparing headline rates alone.
Understand repayment structure
Use the amortization sample to see how principal and interest behave under the selected method.
Important notes
- Enter the contractual annual interest rate quoted by the lender.
- Flat-rate borrowing can have a much higher effective cost than the headline flat rate suggests.
Frequently asked questions
What is reducing-balance interest?
Interest is calculated on the outstanding principal, so the interest component declines over time.
What is a flat rate?
Interest is calculated using the original principal for the full term, even as the loan is repaid.
Does this replace a bank quote?
No. It is an estimate; use the lender contract and official disclosure for decisions.
Why should I include fees?
Mandatory fees increase the cash cost of borrowing and can materially change a comparison between lenders.
Does this replace a bank quote or APR disclosure?
No. Use the lender's official repayment schedule and legally required cost disclosure for a final decision.
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Results are estimates for general information only and are not financial, accounting, tax, investment or legal advice. Verify important figures with a qualified professional.