---
title: "Loan Payment Calculator | Payment, Interest & Payoff | BQ Calculator"
canonical: "https://calculator.bqtools.com/loan-calculator/"
description: "Calculate monthly loan payments, total interest, payoff time and savings from optional extra payments with a transparent amortization model."
---

# Loan Payment Calculator

Model a fixed-rate installment loan and see exactly how optional extra monthly payments can change payoff time and total interest.

BQ Calculator · https://calculator.bqtools.com/loan-calculator/

## Inputs

Share links contain only the values needed to recreate this calculation.

## Loan results

The meter shows the share of baseline interest avoided by the extra payment.

## How the loan payment is calculated

This calculator models a standard fixed-rate installment loan with equal scheduled monthly payments. It first converts the annual percentage rate to a monthly rate, computes the payment required to amortize the principal over the selected term, then simulates each month so optional extra principal payments can be measured accurately.

## Formula

```text
payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
```

P is the loan principal, r is the monthly interest rate, and n is the number of monthly payments. When the rate is zero, the payment is simply principal divided by the number of months.

## How extra payments change payoff

Each simulated month calculates interest from the outstanding balance. The scheduled payment plus your optional extra payment is then used to cover interest and reduce principal. Because later interest is calculated on a smaller balance, consistent extra payments can reduce both total interest and payoff time.

## Worked example

A $25,000 loan at 7.5% for five years produces a fixed scheduled payment. Entering an extra $100 per month does not change that contractual scheduled payment; instead, it increases the amount applied each month and shows the estimated months and interest saved.

## Assumptions and limitations

The model assumes a fixed rate, monthly payments, no late payments, no fees, and no prepayment penalty. Real loan agreements can use different compounding conventions or include origination charges and insurance, so confirm lender disclosures before making a financing decision.

## Frequently asked questions

### What payment formula does this loan calculator use?

For a fixed-rate installment loan, the scheduled payment uses the standard amortizing-loan formula based on principal, monthly interest rate and number of monthly payments.

### How are extra monthly payments handled?

The calculator adds the extra amount to the scheduled payment and simulates the balance month by month. Extra money is applied to principal after that month’s interest.

### Does an extra payment always save interest?

For a normal amortizing loan with no prepayment penalty, paying principal earlier usually reduces future interest and shortens payoff time. Your lender’s rules may differ.

### Does this include origination fees or insurance?

No. The model covers principal and interest only. Add lender fees, insurance, taxes or other financing costs separately when comparing offers.

### Can I use this for mortgages?

You can model principal and interest, but the dedicated Mortgage Payment Calculator also includes property tax, homeowners insurance and HOA costs.

### Related calculators

All calculation inputs stay local to this browser.

## Machine-readable resources

- Calculator registry: https://calculator.bqtools.com/calculators.json
- Site index: https://calculator.bqtools.com/llms.txt
- Full agent text: https://calculator.bqtools.com/llms-full.txt
- Agent discovery index: https://calculator.bqtools.com/agent-index.json