Monthly payment
The fixed dollar amount due each month on an installment loan. Determined by principal, APR, and term using the standard amortisation formula.
Full definition
The monthly payment on a fixed-rate installment loan is the amount due each month for the full term. It is calculated by the standard amortisation formula: M = P × r × (1 + r)^n / ((1 + r)^n − 1), where P is principal, r is the monthly rate (APR / 12 / 100), and n is the number of monthly payments. Use a loan-payment calculator to model how changing the APR or term affects your monthly payment.
- Written by
- Get Advance Loan Editorial Team
- Reviewed by
- Compliance Review
- Published
- January 15, 2026
- Last reviewed
- May 22, 2026
- APR (Annual Percentage Rate)APR is the yearly cost of borrowing, expressed as a percentage of the loan amount. It includes interest plus most lender fees, so it's a more complete measure of cost than the interest rate alone.
- Interest rateThe interest rate is the percentage of the loan balance charged per year as interest, excluding fees. It is a component of, but smaller than, the APR.
- Fixed interest rateA fixed rate stays the same for the entire life of the loan, so the monthly payment never changes. Most U.S. personal loans are fixed-rate.
- Variable interest rateA variable rate can change over the life of the loan, usually tied to an index like the prime rate. Monthly payment can rise or fall.
- Prime rateThe prime rate is the benchmark interest rate U.S. banks publish for their most creditworthy commercial customers. Many consumer rates are quoted as prime + a margin.
- Loan termThe loan term is how long you have to repay the loan, usually expressed in months. Common personal-loan terms are 24, 36, 48, 60, and 72 months.
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