Loan Interest Calculator
How Loan Interest is Calculated
1. Monthly Interest Rate
Annual interest rate is divided by 12 to get the monthly rate.
Monthly Rate = Annual Rate ÷ 12
2. Monthly Payment Calculation
Uses the loan amount, monthly rate, and total number of payments.
Payment = Amount × (Rate × (1 + Rate)^Months) ÷ ((1 + Rate)^Months - 1)
3. Total Interest
The difference between total payments and original loan amount.
Total Interest = (Monthly Payment × Number of Payments) - Loan Amount