How much will you pay on a loan
each month and overall?

Lower monthly payments can come with more total interest

Repayment methods change how quickly principal falls. This hypothetical example borrows 12,000 monetary units for 12 months at a fixed 12% annual rate, with no grace period. Amounts use two decimal places and the calculator rounds monthly interest. Fees are excluded; these are not terms of an actual loan product.

The first bullet payment of 120 is interest only. Principal stays at 12,000, producing total interest of 1,440; the final payment is 12,120, including principal and that month’s interest. Comparing only the first payment misses the large maturity obligation.

A longer term changes monthly payments and total interest differently

For the same principal at a positive fixed rate, a longer level-payment term can lower monthly payments while increasing total interest because principal remains outstanding longer. At 0%, interest stays zero and principal is simply spread over more months. Total payments include principal plus interest; the entire amount is not the cost of borrowing.

First change only the term while keeping rate and method fixed, and compare monthly payments, total interest and the final payment. Changing rate and term together makes their effects harder to distinguish. Compare payments with living expenses and other debts; this calculator does not assess income or determine an approved borrowing limit.

A grace period leaves principal outstanding

During a grace period for level-payment or equal-principal loans, only interest is paid. Grace months are included within the total term here: three grace months in a 12-month loan leave nine months to repay principal. Repaying the same principal over a shorter remaining term can increase later payments.

Use the monthly schedule to distinguish grace-period payments from payments after principal repayment begins. Bullet loans already pay interest monthly and principal at maturity, so no separate grace period applies. Adding grace months on top of the term, or treating grace as an interest waiver, changes the model.

Compare the fixed-rate estimate with the contract’s cash flows

The estimate uses the annual rate divided by 12 and holds it constant throughout. A higher rate can be explored as a separate scenario for variable-rate borrowing, but applying that rate for the entire term does not reproduce a schedule repriced on an actual reset date.

The model excludes early repayments, prepayment fees, guarantee fees and interest based on actual payment dates. Monthly rounding can adjust the final principal payment. Refinancing or partial repayment requires remaining principal, remaining term and additional costs; a difference in total interest alone does not establish net savings.

Model installment savings from monthly spare cash · Calculate deposit interest on existing cash

Level payment

Principal and interest combine into a nearly level monthly payment. Interest dominates early payments, while principal grows over time.

Equal principal

The same principal amount is repaid each month and interest is charged on the remaining balance. Payments start higher and decline over time.

Bullet loans and interest-only periods

A bullet loan pays interest until principal is due at maturity. An interest-only period likewise delays principal reduction and generally increases total interest.

Borrowing $100,000 at 4% for 30 years

This example assumes level monthly payments, no interest-only period, and monthly interest calculation.

Loan principal

$100,000

Estimated monthly payment

$477

Estimated total interest

About $71,868

A longer term lowers the monthly payment but keeps principal outstanding longer, which can substantially increase total interest.

Frequently asked questions