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Free tools for starting and running a small business

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No. 13Cash & Financing

Loan Payment Calculator

Work out the monthly payment on a fixed-rate business, equipment or vehicle loan — plus the total interest and a year-by-year amortization schedule.

The nominal annual rate; interest is charged monthly.

Decimals allowed — 2.5 is 30 monthly payments.

Goes straight to principal. Check for prepayment penalties first.

Origination or closing fees you pay, not added to the loan.

Results

Monthly payment

$1,025.83

60 payments

  • Principal
  • Interest
Total interest
$11,549.59
Total of payments
$61,549.59
Interest as % of loan
23.1%
Show the calculation
  1. Monthly rate (r)8.5% ÷ 12= 0.7083%
  2. Payments (n)5 years × 12= 60
  3. Payment$50,000.00 × r ÷ (1 − (1 + r)^−60)= $1,025.83
  4. Total interest$1,025.83 × 60 − $50,000.00= $11,549.59

Starting a business? Borrowing to start? Carry the loan into the Business Idea Check to see whether the business can carry the payment and still pay you.

Amortization schedule

Remaining balance falls slowly at first, then faster as less of each payment goes to interest.

$0$20K$40K$60K012345Year
Show year-by-year table
YearPrincipal paidInterest paidEnding balance
1$8,381.45$3,928.47$41,618.55
2$9,122.30$3,187.62$32,496.25
3$9,928.63$2,381.29$22,567.62
4$10,806.23$1,503.69$11,761.40
5$11,761.40$548.52$0.00

Monthly payment: rate vs. term

For a $50,000 loan.

Monthly payment: rate vs. term: rows are Rate, columns are Term
Rate ↓ · Term →3 yrs5 yrs7 yrs10 yrs
7.5%$1,555.31$1,001.90$766.91$593.51
8%$1,566.82$1,013.82$779.31$606.64
8.5%$1,578.38$1,025.83$791.82$619.93
9%$1,589.99$1,037.92$804.45$633.38
9.5%$1,601.65$1,050.09$817.20$646.99

Compare a second offer

Same loan amount ($50,000). Offer A uses the rate, term and fees above. Both are compared without extra payments.

Offer AOffer B
Monthly payment$1,025.83$760.76
Term5 years7 years
Total interest$11,549.59$13,903.77
Upfront fees$0.00$1,000.00
Total cost of borrowing$11,549.59$14,903.77
Effective APR8.5%7.88%

Offer A costs $3,354.18 less in total, but its monthly payment is $265.07 higher. A lower payment over a longer term usually costs more overall.

How it’s calculated

Monthly Rate (r)
equals Annual Rate ÷ 12
Number of Payments (n)
equals Years × 12
Payment
equals Loan × r ÷ (1 − (1 + r)^−n)
Total Interest
equals Payment × n − Loan

Each payment first covers the interest accrued on the remaining balance; the rest reduces the balance. Early payments are mostly interest, which is why the balance falls slowly at first.

Worked example

A landscaping company finances $80,000 of equipment at 7.25% APR and is choosing between a 7-year and a 5-year term.

  1. 7 years (84 payments): $1,217.21 a month, $22,246.04 in total interest
  2. 5 years (60 payments): $1,593.55 a month, $15,612.93 in total interest

The shorter term costs $376.33 more each month but saves $6,633.11 in interest. The right choice depends on whether the business can carry the higher payment comfortably.

Assumptions and limitations

  • Fixed interest rate, equal monthly payments, and interest compounded monthly — the standard structure for most term loans.
  • Upfront fees are included only when you enter them; they raise the effective APR shown. Points, insurance and balloon payments are not modeled.
  • Variable-rate loans, lines of credit, interest-only periods and SBA loans with special structures will differ.
  • Payments are rounded to the cent for display; the final payment absorbs any rounding difference.

Results are estimates for information only and are not financial, tax or legal advice. See our disclaimer.