How to Calculate Loan Payments: The Monthly Amount and the Total You'll Pay

Only three numbers decide the payment

A loan payment is determined by the loan amount, the interest rate (annual) and the repayment term. Put the other way, no estimate can give you an amount until all three are fixed. Vague figures like "around 1%" or "about 35 years" turn directly into a range of several million yen, so start by pinning these three down.

• Loan amount: the principal you actually borrow. It's the property price minus your down payment, and if you pay the fees separately it isn't the property price itself.
• Interest rate (annual): the rate per year. In the calculation, it's divided by 12 and used as a monthly rate. An annual 1.0% is a monthly rate of about 0.0833%.
• Repayment term: the number of months until the loan is paid off. 35 years means 420 payments, and 25 years means 300.

On top of these three, the amount also moves with the repayment method (equal payment or equal principal) and whether you use bonus payments. The difference between the methods is covered in equal payment vs equal principal repayment. Below, we assume equal-payment repayment, the most common method in Japan.

Interest is charged on the balance at that moment

Loan interest isn't charged on the full amount borrowed for the whole term. At each payment, one month's rate is applied to the principal still outstanding.

Whatever part of the monthly payment exceeds this interest goes toward repaying principal. As the balance falls, next month's interest falls too, so a growing share of the same payment goes to principal. That's why the exact total repayment can't be found just by multiplying the monthly payment by the number of payments: it has to be built up one payment at a time.

With equal-payment repayment, the monthly amount is worked out backwards so that this running calculation lands exactly on 0 at the end. The formula is "principal × monthly rate × (1 + monthly rate)^payments ÷ ((1 + monthly rate)^payments − 1)", but you'll rarely calculate it by hand. In practice, people use a calculator tool or a lender's estimate sheet.

The payment stays the same, but what's inside changes every month

For ¥30 million over 35 years at an annual 1.0% with equal-payment repayment, the monthly payment is ¥84,685. The payment stays the same to the end, but the breakdown shifts like this.

About 30% of the first payment goes to interest. Even after 10 years of payments the balance is ¥22.47 million, down by only ¥7.53 million. The table bears out the feeling that principal barely moves in the early years. It's also why prepaying is said to work best when done early: the balance is at its largest then.

Under these terms the total repayment is ¥35,567,804, of which ¥5,567,804 is interest, or about 16% of everything you pay. Only the final payment differs, at ¥84,789, because the amount rounded down from each payment is settled all at once at the end.

What happens when you change the amount or the term

At 1.0% over 35 years, changing only the loan amount changes the payment in clean proportion. For a rough figure, remember about ¥28,000 a month per ¥10 million borrowed.

Changing the term, on the other hand, isn't proportional. With ¥30 million at 1.0% and only the term changing, the monthly burden and the interest move in opposite directions.

Cutting 35 years to 20 reduces interest by ¥2.45 million but adds ¥53,000 to the monthly burden. It's easier to decide if you think of a longer term as buying lighter monthly payments with extra interest. For the effect of changing the rate instead, see interest rates and total repayment.

Car loans and education loans use the same calculation

The mechanism doesn't change with the purpose of the loan. Only the typical rates and terms differ.

Even on a small amount, interest can't be ignored when the rate is high. In the personal loan example, borrowing ¥1 million costs ¥230,000 in interest. What matters isn't the size of the loan alone but "rate × term × balance".

Calculate it with the tool

In the Loan Repayment Simulator, you enter the three numbers and get the monthly payment, total repayment, interest and payoff date right away. Amounts written like "3000万" or "1億2000万" are also understood.

1. 1

   Enter the terms

   Enter the loan amount, interest rate and term. You can start from a preset for a mortgage (variable or fixed), car loan, education loan or personal loan, then adjust the numbers.

2. 2

   Choose the repayment method and bonus payments

   You can switch between equal payment and equal principal. To use bonus payments, specify how much of the loan to repay with bonuses.

3. 3

   Check the breakdown and trend

   You'll see the ratio of principal to interest, the repayment breakdown for each year, and a chart of the falling balance. It shows at a glance how much interest you pay in the early years.

4. 4

   Export the repayment schedule

   The schedule switches between yearly and monthly views and can be copied as tab-separated text. Paste it straight into Excel or a spreadsheet and build it into your financial plan.

If you'd rather know how much you can borrow, use the "Borrowing capacity" tab. The thinking behind it is covered in calculating your borrowing capacity. If you plan to use savings to repay ahead of schedule, see also the effect of prepayment.

FAQ

What's the monthly payment on ¥30 million over 35 years at 1.0%?

With equal-payment repayment and no bonus payments, it's ¥84,685 a month. The total repayment is ¥35,567,804, including ¥5,567,804 in interest. Only the final payment differs, at ¥84,789, because of rounding. Each extra ¥10 million adds about ¥28,000 a month, so ¥40 million comes to ¥112,914 and ¥20 million to ¥56,457.

Can I calculate the total as monthly payment × number of payments?

You'll get close, but it won't match exactly. Each payment is rounded down to the yen, and the accumulated fractions are settled in the final payment. For ¥30 million over 35 years at 1.0%, ¥84,685 × 420 payments = ¥35,567,700, while the actual total is ¥35,567,804, a gap of ¥104. For the exact figure, check the total on the repayment schedule.

How much of the monthly payment is interest?

The share of interest falls as you repay. For ¥30 million over 35 years at 1.0%, ¥25,000 of the first ¥84,685 payment (about 30%) is interest, falling to ¥11,852 (about 14%) after 20 years. Total interest over the whole term is ¥5.56 million, about 16% of everything you pay. The higher the rate and the longer the term, the larger this share.

Why does my figure differ from the bank's estimate by a few dozen yen?

It comes down to rounding. Lenders differ in whether they round each payment up or down, and whether they calculate interest daily or monthly. This tool calculates monthly, rounds down to the yen and adjusts the remainder in the final payment. That's plenty for checking the scale and comparing terms, but confirm the contract amount in the lender's documents.

I want to know the total including fees.

This calculation covers only principal and interest. A mortgage also involves a processing fee (about 2.2% of the loan), a guarantee fee, registration costs, fire insurance and so on, which can add up to several hundred thousand yen or even over ¥1 million. If you'll borrow the fees as part of the loan, run the estimate with that amount added for a more realistic figure.