Finance Calc App

Canada Loan repayment calculator

Monthly payment and total interest for auto, personal, or student loans.

By Ward Last reviewed Methodology

Loan details

Monthly payment
$400.76
Total interest
$4,045.54
Total paid
$24,045.54

How a loan repayment is calculated

The monthly payment formula for a fixed-rate loan is the standard amortization formula:

M = P · r · (1 + r)n / ((1 + r)n − 1)

P is the loan amount, r is the monthly interest rate (annual ÷ 12), and n is the total number of monthly payments (years × 12). The payment is constant; what changes month to month is the split between principal and interest.

Worked example

Borrow $20,000 at 8% APR over 5 years:

A 7-year term at the same rate drops the monthly payment to about $312 but raises total interest to roughly $6,200 — about $1,900 more. Going from 5 to 10 years more than doubles total interest while cutting the monthly payment by a third.

APR vs interest rate

The interest rate is what you pay on the principal. APR (Annual Percentage Rate) bundles the interest rate with required fees — origination, points, mandatory insurance — into a single number. APR is always equal to or higher than the interest rate, and is the better number to compare across offers. The lender with the lower interest rate but higher fees can easily be the worse offer.

How extra payments shrink the loan

Every dollar of extra principal eliminates all future interest that would have accrued on it. On the example above, an extra $50/month cuts the payoff time by about 8 months and saves around $610 in interest. Confirm there's no prepayment penalty in your contract first — most modern personal and auto loans don't have one, but some specialty lenders still do.

Common mistakes

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Frequently asked questions

How do I calculate a monthly loan payment?
Monthly payment = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. A $20,000 loan at 8% for 5 years works out to about $406/month — total interest paid over the term: roughly $4,332.
What's the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) bundles the interest rate with required fees — origination, points, certain insurance — into a single number you can compare across offers. APR is always equal to or higher than the interest rate, and is the better number for shopping.
How can I pay off my loan faster?
Two main strategies: pay extra on principal each month (even $50 extra makes a meaningful dent over time), or refinance to a shorter term or lower rate. With most loans there's no prepayment penalty in modern markets, but check your contract — some auto and personal loans still include one.
Should I take a longer-term loan for lower monthly payments?
A longer term lowers the monthly payment but increases total interest substantially. A $20,000 loan at 8% costs $4,332 in interest over 5 years but $9,733 over 10 years — more than double. Choose the shortest term whose payment fits comfortably in your budget, and consider prepaying when you can.

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