Quick answer: A 100,000 loan at 6% a year over 10 years costs 1,110.21 a month; paying 1,500 a month instead clears it in 82 months, with 21,944.16 of interest.
How it's calculated
Payment for a term: M = P·r ÷ (1 − (1 + r)^−n), where P is the loan, r the annual rate ÷ 12 and n the number of months.
Term for a payment: n = −ln(1 − r·P ÷ M) ÷ ln(1 + r). The result is rounded up to whole months, and the last payment is smaller. The payment must be larger than one month's interest (P × r), or the balance never falls.
Islamic finance with a fixed profit rate (Murabaha, Ijara) uses the same formula. For a flat-rate quote use the loan and Murabaha calculator; for every month of the schedule see the amortization calculator.
Worked examples
- 100,000 at 6% for 10 years: M = 1,110.21, total interest 33,224.60
- 100,000 at 6%, paying 1,500 a month: 82 months, last payment 444.16
Frequently asked questions
Why does a bigger payment save so much interest?
Interest is charged on the remaining balance each month, so anything above the minimum cuts the balance sooner and every later month's interest with it.
Is the rate the APR?
Use the loan's nominal annual rate. The APR also counts fees; if fees are paid upfront, see the APR calculator for the real cost.
Does this work for profit-rate finance?
Yes. A fixed annual profit rate on a reducing balance gives the same monthly installment as an interest rate of the same size.
How do I work out the time to repay?
Choose time to repay and enter the payment you can afford. The calculator tells you how many months it takes and the total interest.
What if the payment is too small?
If it doesn't cover the first month's interest, the loan would never be repaid, so the calculator asks for more.
Does a payment include fees?
No. It covers the loan and interest only. Add insurance, admin fees and other charges separately, or use the APR calculator to compare them.