ToolnozaFixed-payment loan formula
For a fixed-rate, fully amortizing loan, payment = P × r ÷ (1 − (1 + r)^−n), where P is principal, r is the monthly interest rate as a decimal and n is the number of monthly payments. For a nominal annual rate, r = annual rate ÷ 12.
Example: $10,000 over five years
At 6% annual interest over 60 months, r = 0.06 ÷ 12 = 0.005. The estimated payment is about $193.33 per month before fees. The total of 60 payments is about $11,600, so estimated interest is about $1,600 if the rate and payment schedule stay unchanged.
Understand what the estimate excludes
This formula assumes a constant rate and equal monthly payments. It may not model income-based repayment, deferment, variable rates, capitalized interest, fees, grace periods or lender-specific rounding. Compare the result with the servicer’s current statement and loan terms.
Frequently asked questions
Does a lower rate reduce the payment? Usually, for the same balance and term. Does the estimate include fees? Not unless entered. Is it a repayment recommendation? No; use your official loan documents and contact the servicer about eligibility or repayment choices.