Loan

Loan Calculator

Personal, auto, or student loan. Drag a slider to see your monthly payment, total interest, and balance curve update in real time.

How the loan calculator works

This calculator uses the standard fixed-payment amortization model that underlies virtually every consumer installment loan — personal loans, auto loans, and student loans included. You enter three inputs (loan amount, APR, and term), and the calculator instantly computes your fixed monthly payment, the total interest you will pay over the life of the loan, and a full amortization schedule showing how each payment is split between principal and interest.

Amortization means each payment is the same dollar amount, but the portion going toward interest gradually shrinks while the portion reducing your principal grows. In the early months of a 5-year loan, the majority of your payment covers interest on the large outstanding balance. By the final months, almost all of it goes to principal because the balance is nearly gone. The amortization chart above makes this shift visible at a glance.

This tool is designed for anyone weighing a new borrowing decision: comparing competing loan offers, stress-testing a monthly payment against a budget, or understanding exactly how much a lower APR or shorter term would save. You do not need any financial background — adjust the sliders and the numbers update in real time.

The formula

The monthly payment amount comes from the standard annuity formula, also called the loan amortization formula:

M = P × r(1+r)^n / ((1+r)^n − 1)

P = loan amount (principal)
r = monthly interest rate (APR ÷ 12)
n = total number of monthly payments (years × 12)

In plain English: you multiply the principal by a factor that accounts for the compounding effect of interest over all future payments, then divide by a related factor that represents the total growth of those payments. The result is the fixed amount you must pay each month so that your balance reaches exactly zero on the final payment date. The formula assumes you make payments on the same date each month and that the rate never changes — both standard assumptions for a fixed-rate installment loan.

Worked example

Suppose you borrow $15,000 as a personal loan at 8.5% APR over a 5-year (60-month) term. Here is the step-by-step calculation:

Convert APR to a monthly rate: 8.5% ÷ 12 = 0.7083% per month, or r = 0.007083.
Compute (1 + r)^n: (1.007083)^60 ≈ 1.5204.
Apply the formula: M = 15,000 × (0.007083 × 1.5204) / (1.5204 − 1) = 15,000 × 0.010772 / 0.5204 ≈ $307.17 per month.
Total paid: $307.17 × 60 = $18,430.
Total interest: $18,430 − $15,000 = $3,430 in interest over the life of the loan.

If instead you chose a 3-year term at the same APR, the monthly payment would rise to about $473, but total interest would fall to roughly $1,030 — saving you over $2,400 simply by accepting a higher monthly commitment.

When to use this calculator

Comparing loan offers:Enter each lender's APR and term side by side to see which offer is actually cheaper in total dollars paid, not just monthly payment.
Budgeting for a purchase: Set your maximum affordable monthly payment and work backward — drag the loan amount slider until the payment fits your budget.
Deciding on term length: See exactly how much interest you save by choosing 3 years over 5, and judge whether the higher payment is worth the savings.
Modeling extra payments: Use the total interest figure as a baseline. If you plan to pay an extra $50 a month, a separate payoff calculator can show how much sooner you will be debt-free.
Understanding your current loan: Plug in your existing loan's details to verify your statement, confirm the amortization schedule, or explore refinancing scenarios.

Key concepts

APR (Annual Percentage Rate): The yearly cost of borrowing expressed as a percentage, including the interest rate and most mandatory fees (such as origination fees). APR is the standardized metric required by the Truth in Lending Act, making it the correct number to use when comparing loans from different lenders.
Amortization: The process of paying off a debt through regular, equal payments over time. Each payment covers the interest due on the current balance and reduces the principal by the remainder. An amortization schedule lists every payment, showing how much goes to interest and how much reduces your balance.
Principal: The original amount borrowed, before interest. As you make payments, the principal balance decreases. Interest is always calculated on the remaining principal, which is why extra payments reduce total interest — they shrink the base on which future interest is computed.

Common mistakes

Confusing APR with the interest rate: Lenders sometimes advertise the base interest rate, which excludes fees. The APR is always higher (or equal) and is the accurate cost comparison figure. Use APR in this calculator.
Ignoring origination fees: A 1–5% origination fee is deducted from your loan disbursement, meaning you receive less than you borrowed. If you need exactly $10,000, you may need to borrow $10,500 to net the right amount after a 5% fee.
Not modeling extra payments: The amortization schedule assumes minimum payments only. Even small additional principal payments each month meaningfully reduce total interest and shorten the loan term. Use a dedicated payoff calculator to model this.
Comparing only monthly payments: A lower monthly payment from a longer term can cost thousands more in total interest. Always compare the total cost (monthly payment × number of months) across offers, not just the payment size.
Assuming variable means cheaper: Variable-rate loans may start with a lower rate, but that rate can rise significantly over a multi-year term. Model the worst-case scenario using the rate cap before committing to a variable-rate product.

Frequently asked questions

What is the difference between a personal loan and a line of credit?

A personal loan delivers a lump sum that you repay in fixed monthly instalments over a defined term. The interest rate, payment, and payoff date are all set from day one. A line of credit (such as a HELOC or personal line) is a revolving facility: you draw funds as needed up to a credit limit, repay them, and can borrow again. Interest accrues only on the outstanding balance. Loans work best for single, planned expenses like a home repair or debt consolidation. Lines of credit suit ongoing or unpredictable cash needs.

Does prepaying a loan early save interest?

Yes — often significantly. Because interest is calculated on the remaining principal each month, any extra amount you pay reduces the balance faster, which reduces every future interest charge. A single extra payment per year on a 5-year $20,000 loan at 8% can cut roughly four months off the term and save around $400 in interest. Before prepaying, check your loan agreement for prepayment penalties, which some lenders charge to recover expected interest income.

What APR can I realistically expect with a 720 credit score?

A 720 FICO score places you in the "good" credit tier. For a personal loan, you can typically expect APRs in the 9–14% range from traditional banks and credit unions, and 10–17% from online lenders, depending on your income, debt-to-income ratio, loan amount, and term. Borrowers with scores above 760 often qualify for rates closer to 7–10%. Shopping at least three lenders — including your bank, a credit union, and an online lender — helps ensure you get the best available rate for your profile.

Fixed vs. variable rate: which is better for a multi-year loan?

For loans with terms of three years or more, a fixed rate is generally the safer choice. Your payment never changes, making budgeting straightforward and protecting you if market rates rise. Variable rates are tied to an index (such as the prime rate or SOFR) plus a margin. They often start lower than fixed rates but can increase substantially over a long term. A variable rate may make sense if you plan to repay the loan quickly — within one to two years — and can handle potential payment increases.

Does the APR already include origination fees?

It should, by law. Under the Truth in Lending Act, lenders must include most mandatory fees — including origination fees — in the APR calculation. This is why a loan advertised at "8% interest" with a 2% origination fee will carry an APR above 8%. However, some fees (like prepayment penalties or late fees) are excluded from APR. Always read the loan's Loan Estimate or Truth in Lending disclosure to see the full list of charges.

What is the difference between a secured and an unsecured personal loan?

A secured loan requires collateral — an asset you pledge (car, savings account, home equity) that the lender can seize if you default. Because the lender's risk is lower, secured loans typically carry lower interest rates. An unsecured personal loan requires no collateral; approval depends on your credit score, income, and debt-to-income ratio. Unsecured loans are more common for everyday borrowing but generally carry higher APRs. If you default on an unsecured loan, the lender cannot immediately seize property, but they can pursue collections and court judgments.

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This tool is for educational purposes only and does not constitute financial advice.