How to use the loan amortization calculator
- Enter the loan amount (principal) in pesos.
- Enter the annual interest rate. Banks often quote personal loans as an add-on monthly rate — see below for how to convert it.
- Enter the term and press Calculate to see the monthly payment, total interest and the amortization schedule.
Amortization formula
M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
P = principal, r = annual rate ÷ 12, n = number of months
This is the standard diminishing-balance method used for housing loans, car loans from many banks, Pag-IBIG and SSS. Each payment covers that month's interest on the remaining balance, and the rest reduces the principal, so early payments are mostly interest.
Add-on rate vs effective annual rate
Many Philippine banks and lending apps quote a monthly add-on rate, for example 1.5% per month. Add-on interest is computed on the original principal for the whole term, so the true cost is much higher than 18% a year. A ₱100,000 loan at 1.5% add-on for 24 months costs ₱36,000 interest, monthly payment ₱5,666.67. That is roughly equivalent to a 31–32% annual rate on a diminishing balance. Since the Truth in Lending Act (RA 3765), lenders must disclose the effective interest rate — always ask for it and compare using this calculator.
Peso examples
- Personal loan: ₱100,000 at 24% per year for 24 months → about ₱5,287/month, total interest ≈ ₱26,900.
- Car loan: ₱800,000 at 9% for 60 months → about ₱16,607/month.
- Housing loan: ₱3,000,000 at 7% for 20 years → about ₱23,259/month. For Pag-IBIG rates use the Pag-IBIG housing loan calculator.
Tips before you borrow
- Keep total monthly debt payments under about 30–40% of your take-home pay — check it with the net pay calculator.
- Compare government options first: SSS salary loans and Pag-IBIG multi-purpose loans usually charge around 10% a year, far below online lending apps.
- Ask about processing fees, documentary stamp tax and pre-termination penalties; they raise the real cost.
- Only borrow from lenders registered with the SEC or supervised by the BSP.
Official sources
Understanding the amortization schedule
The schedule shows every monthly payment split into interest and principal, plus the remaining balance. In the first months of a long loan, most of your payment is interest. For a ₱3,000,000 housing loan at 7% over 20 years, the first payment of about ₱23,259 includes roughly ₱17,500 of interest and only ₱5,759 of principal. By the last years, almost the whole payment goes to principal. This is why extra principal payments early save the most interest: every peso you prepay stops earning interest for the rest of the term. If your lender allows partial prepayment without penalty, putting your 13th month pay toward principal each December can shorten a 20-year loan by several years. Use the 13th month pay calculator to see how much you could put in.
Last updated: October 30, 2026