A loan payment is worked out so that a fixed amount each month clears the debt exactly by the end of the term, while covering the interest along the way. Three numbers drive it: how much you borrow, the interest rate, and how long you take to repay.
What each number does
- The amount is what you borrow. A bigger loan means a bigger payment, in proportion.
- The interest rate is the yearly cost of borrowing. Even a small change moves the payment and, more sharply, the total interest.
- The term is how long you take. A longer term lowers each monthly payment but means more payments — so you usually pay more interest overall.
How to calculate it
- Open the loan calculator and enter the amount, the annual interest rate and the term.
- It shows your regular payment.
- Look at the total interest too — that is the real price of the loan, on top of what you borrowed.
The trap with longer terms
Stretching a loan over more years is tempting because the monthly payment drops. But you are paying interest for longer, so the total cost climbs — sometimes a lot. Try a couple of terms side by side and compare the total interest, not just the monthly figure, before you decide.
This is a general calculation to help you compare options. Real quotes can include fees and different compounding, and this is not financial advice — check the exact figures with the lender.