It works just as well for private lending. If you are lending money to a friend or family member and want a repayment plan both sides understand, calculating the exact monthly amount first makes the written agreement easier to draft and much harder to argue about later.
How it is calculated
M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
M is the fixed monthly payment.
P is the principal — the amount actually borrowed.
r is the monthly interest rate as a decimal. Divide the annual rate by 12, so 12% per year becomes 0.12 ÷ 12 = 0.01.
n is the total number of monthly payments, for example 24 for a two-year loan.
If the interest rate is zero, the formula simplifies to M = P ÷ n — the amount divided evenly across the payments.
Example
Suppose you borrow 100,000 THB at 12% per year, repaid over 24 months. The monthly rate is 1% (0.01), so M = 100,000 × 0.01 × (1.01)^24 ÷ ((1.01)^24 − 1) = 4,707.35 THB per month.
Over 24 payments you hand over 24 × 4,707.35 = 112,976.33 THB in total. That means 12,976.33 THB of interest on top of the 100,000 THB you borrowed.
Understanding your result
The monthly payment is the number to write into your loan or installment agreement. Fixing the exact amount, the due day, and the number of payments in writing prevents most repayment disputes before they start.
Total interest shows the real cost of the loan. If it looks too high, test a shorter term or a lower rate before anyone signs — small changes to either can shift the total by thousands.
Once both sides agree on the numbers, put them into a written agreement and generate a dated payment schedule so every installment has an amount and a due date.
Frequently asked questions
How do I convert an annual interest rate to a monthly rate?
Divide the annual rate by 12. A loan at 12% per year has a monthly rate of 1%, and you use 0.01 in the formula. Make sure the rate you were quoted really is annual — informal loans are often quoted per month, which is 12 times higher.
What if the loan has no interest?
Divide the amount by the number of payments. Borrowing 100,000 THB over 24 months interest-free means 4,166.67 THB per month. Even for interest-free loans between family, a written agreement with the payment amount and dates protects both sides.
Why is the total I repay higher than the amount I borrowed?
Each month, part of your payment covers interest on the balance still outstanding, and only the rest reduces the debt. Over the full term those interest portions add up — in the example above, to 12,976.33 THB. The longer the term, the more interest accumulates.
Can I use this calculator for a loan between friends or family?
Yes. The formula is the same whether the lender is a bank or a relative. Agreeing on a fixed monthly figure makes private loans feel less awkward, because both sides know exactly what is due and when. Record the result in a simple written agreement.
Does the result include fees or late-payment charges?
No. It covers principal and interest only. Processing fees, transfer costs, or penalties for missed payments come on top, so read the agreement for those separately and add them to your budget.
What happens if I pay more than the monthly amount?
Extra payments usually reduce the outstanding balance faster, which cuts future interest and can shorten the loan. Check whether your agreement allows early repayment without a fee, and use an early repayment calculator to see the exact saving.
Results are estimates for general information only and may differ from a lender's exact figures. They are not financial or legal advice.