How we worked it out
Updated as you change the numbers.
- Monthly rate r = 8% ÷ 12 = 0.66667%. Payments n = 60.
- Payment = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1) = $20,000.00 × 0.006667 × 1.4898 ÷ 0.4898 = $405.53.
Method and assumptions
Fixed-rate loans are repaid in equal monthly payments. Each payment first covers the interest for the month (the balance × the annual rate ÷ 12); the rest reduces the balance. Early payments are mostly interest, later ones mostly principal. The payment that brings the balance exactly to zero is P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1).
Loans with fees have an APR higher than their interest rate; use the APR calculator to include fees. Variable-rate loans and loans that charge interest daily may come out slightly different.
Questions
What is the monthly payment on a $20,000 loan at 8% for 5 years?
$405.53. Over 60 payments you repay $24,331.67, of which $4,331.67 is interest.
Sources
Method and figures checked on . Every worked answer on this page is covered by an automated test. Found a mistake? Tell us.