How to Calculate Loan Payments
Loan payments are calculated using a formula that takes into account the loan amount, interest rate, and loan term.
Loan payment formula
EMI = P × r × (1 + r)^n / ((1 + r)^n − 1)
Where:
- P = loan amount
- r = monthly interest rate
- n = number of months
Example
If you borrow $10,000 at 5% annual interest for 5 years:
Your monthly payment will be calculated using the formula above.
Why use a loan calculator
Manual calculation is complex. Using an online loan calculator gives instant and accurate results.
Try Loan Calculator