No. This uses the nominal annual rate divided into twelve monthly periods, which is how a standard amortised loan is built. The APR folds fees and charges into a single figure, so for the same loan it is higher than the rate. Compare offers by APR; calculate payments from the rate.

Why is so much of the early payment interest?

Because interest is charged on what you still owe, and at the start you still owe nearly all of it. On the example above, $135.42 of the first $489.15 goes to interest and only $353.73 reduces the balance. By the last payment those proportions have almost exactly reversed.

Does paying extra help?

On a normally amortised loan, yes, and by more than people expect: an overpayment goes straight against the balance, so it cancels every future interest charge that balance would have carried. Enter an extra monthly amount above and the schedule shows exactly how many months it removes and how much interest it saves. Check your agreement first, because some loans restrict overpayments or charge for them.

What about a 0% loan?

The formula divides by the rate, so zero is handled separately rather than producing nonsense: the payment becomes the amount divided by the number of payments and the interest is zero. Enter 0 and that is what you get.

Money

Loan Payment Calculator

Enter the amount, the annual rate and the term. The interest total is the part a monthly figure hides.

The link carries your figures, so it reopens on exactly these numbers.

If the rate is not the one you entered

Nobody knows their rate before the offer arrives. Half a point either way changes the loan by this much.

If the rate is lower
$483.32
at 6% · $3,999 interest
At the rate you entered
$489.15
at 6.5% · $4,349 interest
If the rate is higher
$495.03
at 7% · $4,702 interest

The same loan over other terms

A longer term always lowers the payment and almost always raises the price.

Term	Monthly	Total interest	Total repaid
3 years	$766.23	$2,584	$27,584
5 years (your choice)	$489.15	$4,349	$29,349
7 years	$371.24	$6,184	$31,184
10 years	$283.87	$9,064	$34,064

Where the money goes

Scale tops out at $25,000

Month 1Month 60

Interest paid so farBalance remainingHalf the debt cleared

Amortisation schedule

Each year of the loan, with interest, principal and remaining balance
Year	Interest	Principal	Balance	Paid off
1	$1,496	$4,374	$20,626	17% repaid
2	$1,203	$4,667	$15,960	36% repaid
3Half the debt is gone at month 33 of 60 — later than the halfway point of the term. You reach half the time before you reach half the debt.	$891	$4,979	$10,981	56% repaid
4	$557	$5,313	$5,668	77% repaid
5	$202	$5,668	$0	100% repaid

The formula

monthly rate r = annual rate ÷ 100 ÷ 12

number of payments n = years × 12

payment = principal × r ÷ (1 − (1 + r)^−n)

total interest = payment × n − principal

Worked example

$25,000 borrowed over 5 years at 6.5%

r = 0.065 ÷ 12 = 0.00541667 per month, n = 60 payments
payment = 25,000 × 0.00541667 ÷ (1 − 1.00541667⁻⁶⁰) = $489.15
489.15 × 60 = $29,349.22 repaid in total
Interest = 29,349.22 − 25,000 = $4,349.22

Where this goes wrong

Comparing monthly payments instead of total cost

A longer term always lowers the payment and almost always raises the price. The same $25,000 at 6.5% is $489.15 a month over five years and $334.66 over eight — $154.50 easier every month, and $2,777.74 more interest by the end. A lender who opens with "what monthly payment are you comfortable with?" is asking a question whose answer sets the price.

Questions

Is this the APR?: No. This uses the nominal annual rate divided into twelve monthly periods, which is how a standard amortised loan is built. The APR folds fees and charges into a single figure, so for the same loan it is higher than the rate. Compare offers by APR; calculate payments from the rate.
Why is so much of the early payment interest?: Because interest is charged on what you still owe, and at the start you still owe nearly all of it. On the example above, $135.42 of the first $489.15 goes to interest and only $353.73 reduces the balance. By the last payment those proportions have almost exactly reversed.
Does paying extra help?: On a normally amortised loan, yes, and by more than people expect: an overpayment goes straight against the balance, so it cancels every future interest charge that balance would have carried. Enter an extra monthly amount above and the schedule shows exactly how many months it removes and how much interest it saves. Check your agreement first, because some loans restrict overpayments or charge for them.
What about a 0% loan?: The formula divides by the rate, so zero is handled separately rather than producing nonsense: the payment becomes the amount divided by the number of payments and the interest is zero. Enter 0 and that is what you get.