7 min read
2026-03-11
A fixed payment every month for the entire term. Easier to plan around, but in the early months you are mostly paying interest.
**Formula:**
PMT = P × r / (1 − (1+r)^−n)
where P is the loan amount, r is the monthly rate, n is the number of months.
The principal is divided evenly, and interest accrues on the remaining balance. The payment decreases each month.
**Bottom line:** Differentiated = less total interest. Annuity = easier to budget.
Loan of $50,000, interest rate 15% per year, term 3 years (36 months):
Monthly rate: 15% / 12 = 1.25%
Annuity payment: ≈ **$1,733/month**
Total interest paid: ≈ **$12,400** (24.8%)
**Interest rate** — the most important factor
**Loan term** — the longer the term, the more interest you pay
**Early repayment** — reduces total interest paid
**Insurance** — is often included in the cost of the loan
Read the contract — pay attention to penalties for early repayment
Calculate the exact payment amount with the Loan Calculator.
See also: Mortgage Calculator, Deposit Calculator, Tax Calculator