Loan Payment Formula Explained with Example
The loan payment formula helps you calculate how much you need to pay every month. It depends on the loan amount, interest rate, and loan term.
The formula
Monthly Payment = P × r × (1 + r)^n / ((1 + r)^n − 1)
What each part means
- P = loan amount
- r = monthly interest rate
- n = number of payments
Example
If you borrow $100,000 at 5% annual interest for 30 years, your monthly payment can be calculated using this formula.
Use the calculator
Instead of calculating manually, use the loan calculator to get instant results.
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