Use the standard amortisation formula to figure out exactly how much you will pay each month for any loan — mortgage, car loan, or personal loan.
Guide étape par étape
Gather the Three Key Numbers
You need: (1) Principal — the amount you are borrowing. (2) Annual interest rate — convert to a monthly rate by dividing by 12. (3) Loan term — the total number of monthly payments (years × 12).
Apply the Amortisation Formula
Monthly payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where P = principal, r = monthly interest rate, n = number of payments. Example: $200,000 loan at 6% for 30 years → r = 0.005, n = 360 → payment ≈ $1,199.
Calculate Total Interest Paid
Multiply your monthly payment by the total number of payments, then subtract the principal. For the example above: $1,199 × 360 − $200,000 = $231,640 in interest over 30 years.
Compare Different Terms
Run the formula for 15 years vs 30 years. A shorter term means higher monthly payments but far less total interest. Many borrowers save tens of thousands by choosing a 15-year mortgage.
Factor in Extra Costs
Your actual monthly payment may include property tax, insurance, and HOA fees (for mortgages). Always ask your lender for the full monthly obligation — not just the principal-and-interest figure.
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Questions fréquentes
Q: Does a lower interest rate always mean lower payments?
A: Yes, all else being equal. Even a 0.5% rate reduction on a $300,000 mortgage saves roughly $90 per month and over $30,000 over 30 years.
Q: What happens if I make extra payments?
A: Extra payments reduce the principal faster, which shortens the loan term and reduces total interest. Most loans allow this without penalty — check your loan agreement.
Q: How is a fixed rate different from a variable rate?
A: Fixed rates stay the same throughout the loan. Variable (adjustable) rates change with market conditions, so your payment can go up or down after an initial fixed period.