Monthly Loan Payment Formula
Formula
M = P · r · (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
Variables
- M
- Monthly payment
- P
- Loan principal
- r
- Monthly interest rate (annual rate ÷ 12)
- n
- Number of monthly payments
Worked example
A $10,000 loan at 6% a year for 36 months: r = 0.06 ÷ 12 = 0.005 and n = 36, so M = 10,000 × 0.005 × 1.005³⁶ ÷ (1.005³⁶ − 1) ≈ $304.22. Over 36 payments that is about $10,951.90, of which about $951.90 is interest.
Related calculator: Loan Calculator
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Frequently asked questions
Does this include fees?
No. The formula covers principal and interest only.