Loan Calculator
Calculate monthly payments, total interest, and total cost for any fixed-rate loan.
The Formula
P = principal · r = monthly rate · n = payments
r = 0.08 / 12 = 0.006667
n = 48
= 15,000 × [0.006667 × (1.006667)⁴⁸] / [(1.006667)⁴⁸ − 1]
= $366 / month
How Loan Payments Are Calculated
Every fixed-rate loan payment is made up of two parts: principal (the amount you borrowed) and interest (the cost of borrowing it). In the early months of a loan, most of your payment goes toward interest. Over time, that shifts — more goes to principal and less to interest. This process is called amortization, and it's why paying even a little extra each month can save a surprising amount of money. An extra $50/month on a $20,000 personal loan at 10% over 5 years can shave months off your payoff date and save several hundred dollars in interest.
What This Calculator Is Good For
This calculator works for any fixed-rate installment loan — personal loans, student loans, business loans, home equity loans, and more. Just enter your loan amount, the annual interest rate (APR), and the loan term in months or years to get your monthly payment and total cost breakdown. For mortgages, use our Mortgage Calculator. For car loans, try the Auto Loan Calculator, which includes options for down payment, trade-in, and sales tax.
How Interest Rate and Term Affect Your Payment
Both the interest rate and the loan term have a big impact on what you'll pay. A longer term lowers your monthly payment but increases total interest. A higher rate obviously costs more. Consider this: a $15,000 loan at 8% over 3 years costs $470/month and $1,939 in total interest. Stretch it to 5 years and the monthly payment drops to $304 — but total interest nearly doubles to $3,239. Knowing this tradeoff upfront helps you choose a term that fits both your monthly budget and your long-term finances.
Frequently Asked Questions
What is the average personal loan interest rate?
Personal loan rates vary widely — typically 6% to 36% depending on your credit score and lender. Borrowers with excellent credit (720+) often qualify for rates in the 7–12% range. Those with fair or poor credit may pay 20–36%. Credit unions and online lenders often offer better rates than traditional banks, so it's worth shopping around.
Can I pay off a loan early without penalty?
Most personal and student loans allow early payoff without penalty, but always check your loan agreement. Some lenders charge a prepayment penalty — usually 1–5% of the remaining balance — to recoup lost interest. If your loan has no prepayment penalty, making even small extra payments can meaningfully reduce your total interest paid.
What is the difference between APR and interest rate?
The interest rate is the base cost of borrowing. The APR (Annual Percentage Rate) includes the interest rate plus any fees, like origination fees. When comparing loan offers, use the APR for an apples-to-apples comparison. A loan with a lower interest rate but high fees may actually cost more than one with a slightly higher rate and no fees.
How does my credit score affect my loan rate?
Your credit score is the single biggest factor in the interest rate you're offered. The difference between a 620 and a 750 score can easily be 10–15 percentage points in APR. If your score is below 670, consider improving it before applying — even a few months of paying down credit card balances and making on-time payments can move your score enough to qualify for a significantly lower rate.
Should I choose a shorter or longer loan term?
A shorter term means higher monthly payments but less total interest. A longer term gives you breathing room in your budget but costs more overall. A good rule of thumb: choose the shortest term you can comfortably afford. If money is tight, choose a longer term — but make extra payments whenever possible to pay it off faster without being locked into higher required payments.