Personal Loan Calculator
Estimate your monthly loan payment based on principal, APR, and term in months.
What this calculator does
It computes fixed monthly payment and summarizes total interest for installment loans.
How to calculate loan payment
Uses the amortization formula: Payment = P × r × (1+r)^n / ((1+r)^n − 1), where r is monthly APR/12.
Who should use this
- Borrowers comparing loan offers
- Auto, personal, or consolidation loans
Examples
- $15,000 at 9.99% for 36 months → ≈ $483/mo
- $8,000 at 7% for 24 months → ≈ $358/mo
Understanding Loan Payments
How Loan Payments Are Calculated
Loan payments use the amortization formula to calculate fixed monthly payments:
Payment = P × [r(1+r)^n] / [(1+r)^n - 1]
Where P is principal, r is monthly rate (APR/12), and n is number of payments. This ensures each payment covers interest and reduces principal.
APR vs Interest Rate
Interest Rate: The cost of borrowing, expressed as a percentage. This is the base rate charged on your loan.
APR (Annual Percentage Rate): Includes the interest rate plus fees and other loan costs. APR gives you the true cost of borrowing and allows you to compare loans more accurately.
Always compare loans using APR, not just the interest rate, as it reflects the total cost.
How to Pay Off Loans Faster
Strategies to reduce loan term and total interest:
- Make extra payments: Apply additional payments directly to principal
- Bi-weekly payments: Make half-payments every two weeks (results in 13 full payments per year)
- Round up payments: Round monthly payment up to nearest $50 or $100
- Refinance: If rates have dropped, refinance to a lower rate or shorter term
- Snowball method: Pay minimums on all loans, put extra toward smallest balance first
- Avalanche method: Pay minimums on all loans, put extra toward highest interest rate first