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.

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     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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Any time you borrow money, you must pay back the amount that you borrowed (principal) and the fee the lender charged for borrowing it (interest). Lending institutions use the process of amortization to determine your monthly payment, which is a combination of principal and interest. Amortization ensures you pay your loan in full with consistent payments at regular intervals through the term of the loan. To determine your own payment amounts, you need to know your initial principal, the term of the loan and the annual percentage rate for your interest.

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     Write down your initial principal, your APR and your loan term. Convert your term and APR to the interval you want for your payments. For instance, if the loan term is expressed in years, multiply by 12 to get the number of months for a monthly payment plan. Likewise, divide the APR by 12 to get a per-month interest value. If you want to calculate a biweekly payment schedule, use 26 instead of 12.
     Principal: $5,000
     APR: 6 percent = 0.06/year = 0.005/month
     Term: 5 years = 60 months

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