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Monthly Payment Interest Rate Calculator

Monthly Interest Rate Payment Definition
Are you in the market for a new car or home? You can use our free online calculator to help determine your monthly payment in advance.
Before you get started, you’ll want to ask yourself a few questions and gather the appropriate information to provide the answers:

1. How much can I afford to pay monthly for a home or car?
Many experts suggest that a house payment should be no more than 28-33% of your total income. The suggested limit for a car payment is normally no more than 20% of your take home income (note the distinction). If you are shopping for a home, be sure to research property tax and insurance rates in the area and include those in your final calculation. Generally your lender will collect these on a monthly basis and pay them on your behalf as they become due.

2. What kind of interest rate and how many payments can I expect to pay?
Before you shop for a specific car or home, shopping for the best interest rate available is important. Also important is to understand how many months the lender will allow for you to pay back your loan. Banks and other lenders generally make this information very easy to find on the internet. You can get a good idea of what the prevailing rates and terms are simply by scanning the websites of a few local banks and other well-known lending institutions.

3. Is leasing a car right for me?
Leasing a car is a great way to lower your overall monthly payment but leasing terms can be difficult to understand. With most leases you are financing a predetermined amount of depreciation based on an agreed upon number of months and miles driven per month. Your lease agreement will include a contractually agreed residual value at the end of the lease that is used in conjunction with the sale price to determine the amount you must finance.
Now you are ready to calculate your monthly payment. Enter the following information into the calculator:
  • Loan Amount: This is the total sale price of the car or home after any discounts, rebates, incentives, etc. have been applied and less any down payment you are making up front.
  • Residual Value: This field should be populated only if you are calculating a lease payment. Enter the contractually agreed residual value at the end of the lease. The difference between the loan amount and the residual value is the amount of depreciation you are financing.
  • Interest Rate %: This is the interest rate you expect to pay based on your research.
  • Number of Months: This is the number of monthly payments you wish to make to pay off your loan. Remember, the fewer payments you make the less total interest you will pay over the course of the loan. However, your payments will be higher.

After you select the “Calculate” button, the following information will be displayed:
  • Monthly Payment: This is the total amount you will pay per month (not including property taxes or insurance).
  • Total Payment: This is the sum of all the payments you will make over the life of the loan.
  • Total Interest: This is the total amount of interest you will pay over the life of the loan. Consider this the cost to you of financing your car or home.

Calculating several likely scenarios and printing them out can be helpful as you continue to shop. Good luck!