What sets your monthly payment
Three inputs decide your monthly payment. Here is what each one does.
The amount you borrow. Every peso of it must come back to the lender.
what you borrowThe cost of borrowing, charged monthly on your remaining balance.
charged monthlyHow long you take to repay. A longer term means a smaller monthly payment but more total interest.
in yearsHow amortization works
interest first, then youAn amortized loan spreads the debt into equal monthly payments, but the split inside each payment shifts over time. Early on, most of the payment covers that month's interest on a still-large balance, and only a little goes to principal. As the balance falls, the interest slice shrinks and more of each payment starts chipping away at what you borrowed. The monthly figure stays the same. What it is doing underneath does not.
This is why long loans cost so much. Borrow ₱1,000,000 at 8 percent a year over 20 years and the payment is about ₱8,360 a month. By the end you will have paid roughly ₱1,000,000 in interest on top of the ₱1,000,000 you borrowed. Halve the term and the monthly payment rises, but the total interest drops sharply, because the balance clears before as much interest can pile up.
One caution on rate types. This calculator assumes a diminishing balance, the way banks quote housing and personal loans. Car loans are often quoted as an add-on rate, where interest is charged on the whole original amount for the full term, so the true cost is much higher than the number suggests. For those, the car loan calculator handles both rate types, and the Pag-IBIG loan calculator covers the government housing program. The result here is the base amortization only. Processing fees, insurance, and repricing are set by your lender.
Questions people ask
answered in plain wordsIt uses the standard amortization formula for a fixed-rate loan with equal monthly payments. Each payment covers that month's interest first, and the rest reduces your principal.
Yes, if your quote uses an amortized rate. But most banks quote car loans with add-on rates, which work differently. The dedicated Car Loan calculator handles both rate types and starts from the car's price and down payment, so it is the better fit for auto loans.
Interest accrues on the remaining balance every month, and early payments are mostly interest. A longer term lowers the monthly amount but leaves the balance higher for longer, so the total interest grows.
No. Banks usually add processing fees, mortgage redemption insurance, and fire insurance for housing loans. Treat the result here as the base amortization and ask your lender for the all-in figure.
Many Philippine housing loans fix the rate for 1 to 5 years and then reprice. Compute with the initial rate for now, then run it again at repricing time with the new rate and remaining balance.
Diminishing interest is charged only on your remaining balance, so it falls as you pay down the loan. Add-on interest is charged on the full original amount for the whole term, which makes the same quoted rate far more expensive. This calculator uses the diminishing method. Add-on rates are common on car loans, so use the Car Loan calculator for those.
A shorter term means a larger monthly payment but much less total interest, since the balance clears faster. A longer term lightens the monthly load but keeps the balance high for longer, so you pay more overall. Run both here and compare the total payment to see the trade in pesos.
Usually yes. Extra payments applied to principal shrink the balance and the interest that follows it, which can shorten the loan noticeably. Some lenders charge a pre-payment fee during the fixed-rate period, so check your loan terms before making large advance payments.
No. Every calculation runs privately on your device. Nothing you type is stored, tracked, or sent to a server.