If you have a loan, your payments are usually divided between principle and interest. At the beginning of the loan, you see more of your payment allocated towards interest. As you continue to make payments during the life of the loan, the principle balance begins to receive more of the payment. Interest is calculated based on the outstanding balance. You can calculate how much of your payment goes to interest and how much goes to principle if you have all of the terms and conditions of your loan.

1. • 1

     Get an online loan calculator to find out your monthly payment. An online calculator is a tool used for various financing scenarios. If you key in all of the terms of a loan, with the exception of the payment, the calculator will determine what your monthly payment will be. A monthly payment is needed to help with the principle and interest calculation.

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     Locate the terms of your loan. For example if you have a 10 year loan, in the amount of $25,000 with an interest rate of 6 percent, the online calculator will calculate the payment. Enter the loan amount, loan term, and interest rate into the calculator. Hit the calculate button to get your monthly payment. The monthly payment is $277.55 for the term of the loan.

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     Calculate the interest due when your first payment is made. Take $25,000 and multiply it times .06 which equals $1,500. Divide the sum by 12 and you get $125 for interest due the first month. Subtract the amount of interest due from your monthly payment of $277.55 to get your principle payment. ($277.55 - $125 = $152.55). The principle payment will be $152.55.

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     Figure out your new balance. Your balance will be $24,847.45 after subtracting the principle payment of $152.55, ($25,000 - $152.55). Your next interest and principle payment will be calculated using the new balance. Take $24,847.45 and multiply it times .06 which equals $1490.847. Divide $1,490.847 by 12 which equal the new interest figure of $124.24, ($124.23725 rounded up). The new principle payment will be $153.31, ($277.55 - $124.24). The new balance will be $24,694.14, ($24,847.45 - $153.31).

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     Find out principal and interest payments when the time between payments is less than 30 days. These calculations assume payments are made every 30 days. If a payment is made 10 days after the last payment, instead of 30, principal and interest payments can still be calculated.

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     Take the balance of $24,694.14 and multiply times .06 which equals $1,481.6484. Divide $1,481.6484 by 12 which equals $123.4707. Divide the new result by 30 and multiply times 10, ($123.4707/30 x 10 = $41.1569). The interest payment for ten days is $41.16. Subtract the interest from the payment to get the principle payment of $236.39, ($277.55 - $41.16). When the number of days between payments is less than 30, the amount of interest is reduced substantially and the principal payment increases.