The formula
Monthly payment = P × (r(1+r)^n) / ((1+r)^n - 1), where P is the amount financed, r is the monthly interest rate (annual rate / 12), and n is the number of monthly payments.
A worked example
On a $25,000 balance at 8.99% APR for 60 months: r = 0.0899/12 = 0.00749, n = 60. The monthly payment is about $521, and total interest is about $6,260. Cut the rate to 6.93% and the payment drops to about $495, saving roughly $1,560 over the term.
What changes the number
- A lower rate lowers both payment and total interest.
- A shorter term raises the payment but cuts total interest sharply.
- A longer term lowers the payment but increases total interest.
- Your credit score is the biggest lever on the rate you are offered.
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Frequently asked questions
This page explains the formula and gives a worked example so you can estimate. For a real offer, apply and we will show your actual rate and payment.
It is a close guide for fixed-rate amortizing loans. Your real payment may differ with taxes, fees, and your approved rate.
Lower the term if you can afford it to save interest; lower the payment if cash flow is the priority.