Loan payoff guide
How much of my loan payment goes to interest?
For a fixed-rate monthly loan, multiply your current balance by your annual interest rate, then divide by 12. The rest of your payment reduces principal.
Example in US dollars
A $10,000 balance at a 12% annual interest rate produces about $100 of interest for the next monthly payment:
$10,000 × 12% ÷ 12 = $100 interest
With a $250 monthly payment, the remaining $150 reduces principal. The balance becomes approximately $9,850 after that payment.