How this calculator works
Each month, interest is charged on the remaining balance and the rest of the level payment reduces the debt. The estimate assumes monthly compounding, payments at month end and a fixed rate. Fees, insurance and balloon payments are excluded. Canadian mortgages can use a different compounding convention.
Formula
i = r/12; A = P × i / (1 - (1 + i)^(-N)); total paid = N × A; total interest = N × A - P. At zero interest, A = P/N. P is principal, r is the annual rate as a fraction and N is the number of months.
Worked example
A $10,000 loan at 6% over 24 months has a monthly payment of $443.21. Using unrounded payments, total repayment is $10,636.95, including $636.95 of interest.
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Frequently asked questions
Does this use Canadian mortgage compounding?
This loan model compounds monthly. Use the mortgage calculator for Canadian semi-annual compounding.
Why does payment times months sometimes differ from the total?
Payments retain fractional cents internally. Each displayed result is rounded separately to two decimal places.
Is the interest rate annual or monthly?
Enter an annual nominal rate. The calculator divides it by 12 for monthly compounding, as shown in the formula.