Reckonary / Finance / Loan repayment
Monthly payment
You'll pay $4,702 in interest over the life of the loan — the real cost of borrowing $25,000.
Same math, shown. No hidden assumptions.
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A fixed-rate loan is repaid in equal monthly payments. Early on, most of each payment is interest; later, more of it goes to the balance. This calculator shows the monthly payment for any amount, rate, and term, plus the two numbers that matter most over the life of the loan: what you pay in total, and how much of that total is interest rather than the money you actually borrowed.
The monthly payment is whatever amount pays the loan down to exactly zero on the last month of the term. It's solved from three inputs: the amount you borrow, the annual rate split across twelve months, and the number of months. Each month the lender charges interest on the balance that's still outstanding, and whatever is left of your payment chips away at the balance. Because the balance shrinks, the interest portion shrinks with it and the principal portion grows — so the same fixed payment quietly does more work as the years pass.
That's also why two loans with the same monthly payment can cost very different amounts. The payment alone tells you what fits your budget; the total interest tells you what the loan actually costs you.
Borrow $25,000 at 7% over 5 years and the payment is $495.03 a month. Over 60 months you hand back $29,701.80, of which $4,701.80 is interest. That $4,701.80 is the price of using someone else's money for five years — the figure worth comparing between offers, far more than the monthly payment, which any lender can shrink simply by stretching the term.
A longer term feels cheaper every month but is more expensive in total, because you owe interest on the balance for more months. Take a $20,000 loan at 9%:
Doubling the term roughly halves the monthly payment but more than doubles the interest — the same $20,000, borrowed for twice as long, costs about $3,000 more. Lower monthly payments and lower total cost pull in opposite directions; the right answer depends on whether your constraint is monthly cash flow or the lifetime price.
Any amount above the scheduled payment goes straight to the balance, so every month after that you're charged interest on a smaller number. On the $25,000 loan above, adding just $50 a month pays it off in 54 months instead of 60 and trims total interest from $4,701.80 to about $4,179 — roughly $520 saved from a change you'd barely notice. Extra payments made early matter most, since they remove interest from every month that follows. Check your agreement first: some loans charge a prepayment penalty that can erase the saving.
Can I pay off a loan early to save on interest?
Usually yes. Paying extra toward the balance shortens the term and cuts total interest, since interest is charged on the remaining balance each month. Check your agreement first, as some loans charge a prepayment fee.
What is APR and is it the same as the interest rate?
The interest rate is the cost of borrowing the money. APR folds in certain fees too, so it is usually a little higher and gives a fairer way to compare offers. This calculator uses the plain interest rate.
Does a longer term mean a cheaper loan?
No. A longer term lowers each monthly payment, which can feel cheaper, but you make more payments and pay more interest overall. Shorter terms cost less in total.
Why does my real loan statement differ slightly from this estimate?
Lenders may round payments, charge fees, or use a different day-count method. Treat the figures here as a close estimate, not an exact quote.
Last reviewed June 2026. This tool is for education, not financial advice.