Your result
What your result means
Borrowing $15,000 at 9.5% over 4 years means a monthly payment of $376.85. Altogether you repay $18,088.65, of which $3,088.65 is interest — about $0.21 for every dollar borrowed.
The math
Formula and sources
M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
- M
- monthly principal-and-interest payment
- P
- amount borrowed (price minus down payment)
- r
- monthly interest rate = annual rate ÷ 12
- n
- term in months
Works for any loan with a fixed rate and equal monthly payments. Origination fees are not included; if a fee is deducted from the loan, your APR is higher than the rate.
Sources we checked this against
- 1PMT function (payment formula and examples)Microsoft Support · support.microsoft.com
- 2Loan Estimate sample H-24(B), fixed-rate loanConsumer Financial Protection Bureau · files.consumerfinance.gov
- 3How do I compare auto loan offers?Consumer Financial Protection Bureau · consumerfinance.gov
Formula last checked 2026-11-04. Found an error? Tell us and we will fix it.
Step by step
Two worked examples
Microsoft’s PMT example
Monthly payment
$1,037.03
- Loan amount
- $10,000
- Interest rate
- 8%
- Term
- 10 months
Excel’s documentation shows $10,000 at 8% over 10 months costs $1,037.03 a month. We get $1,037.03, with $370.34 of interest.
$10,000 at 8% over 5 years
Monthly payment
$202.76
- Loan amount
- $10,000
- Interest rate
- 8%
- Term
- 60 months
Spreading the same loan over 60 months drops the payment to $202.76 but interest grows to $2,165.92.
| Result | Example 1 | Example 2 |
|---|---|---|
| Monthly payment | $1,037.03 | $202.76 |
| Total interest | $370.34 | $2,165.92 |
| Total of payments | $10,370.34 | $12,165.92 |
Questions
Frequently asked questions
What’s the difference between interest rate and APR?
The rate sets your payment. The APR adds certain fees and shows the yearly cost of credit, which makes offers easier to compare. If a loan has fees, its APR is higher than its rate.
Can I pay a personal loan off early?
Most personal loans allow early payoff without penalty, but check the agreement. Paying early saves the interest that would have accrued on the remaining balance.
Why do longer loans cost more?
Interest is charged on the balance every month. A longer term keeps the balance higher for longer, so more interest accumulates even though each payment is smaller.