Loan Calculator
Calculate monthly payment and total interest for any fixed-rate installment loan — personal loans, auto loans, student loans, and more.
How to use this loan calculator
- 1Enter the total loan amount you are borrowing.
- 2Enter the APR (Annual Percentage Rate) from your lender — this includes all fees and is the true comparison rate.
- 3Enter the loan term. Try different terms to see the payment vs. interest trade-off.
- 4Compare total interest paid across different rates and terms — not just the monthly payment.
- 5A shorter term means higher monthly payments but dramatically less total interest paid.
How it's calculated
Monthly payment = P × i ÷ (1 − (1+i)^−n). Interest = (monthly payment × n) − principal.
About the Loan Calculator
Loans are one of the most powerful financial tools available — they let you access value now and pay for it over time. Used wisely, they enable homeownership, education, and business creation. Used carelessly, they create cycles of debt that compound against you.
The key to using loans wisely is understanding the true cost. Most people focus on the monthly payment without calculating total interest paid. A $25,000 personal loan at 12% APR for 5 years has a payment of $556/month — which seems manageable. But over 5 years, you pay $8,360 in interest, meaning the loan actually cost you $33,360 for $25,000 of borrowing power. That context changes the decision calculus.
Before taking any loan, ask three questions: (1) Is this for an asset that appreciates (home, education) or depreciates (vacation, electronics)? Borrowing for depreciating or consumed items is expensive. (2) What is the total cost including all interest, not just the monthly payment? (3) What is my exit strategy — can I pay this off early if my situation improves?
For large loans, the difference between lenders can be enormous. On a $30,000 loan at 7% vs. 11% over 5 years, you pay $3,480 less in interest with the lower rate — more than enough to justify spending several hours shopping lenders. Online lenders, traditional banks, and credit unions all price risk differently, and getting three to five quotes is the single most effective way to reduce borrowing costs.
Frequently asked questions
What is the difference between interest rate and APR?
The interest rate is the base cost of borrowing expressed as a percentage. APR (Annual Percentage Rate) is the interest rate plus all fees — origination fees, broker fees, closing costs — expressed as an annual rate. APR is always equal to or higher than the interest rate. Federal law requires lenders to disclose APR, making it the correct number to use when comparing loan offers from different lenders. A loan with a 7.5% rate and $2,000 in origination fees on a $20,000 5-year loan has an APR of approximately 9.8% — significantly higher than the stated rate.
How do I get the lowest interest rate on a personal loan?
The most important factors are: (1) Credit score — rates for 760+ scores are typically 6–11%, while scores below 620 face 20–35% rates. (2) Debt-to-income ratio — keeping total monthly debt payments below 40% of gross income improves approval odds and rates. (3) Loan term — shorter terms often carry lower rates since lender risk is lower. (4) Shopping multiple lenders — banks, credit unions, and online lenders all price risk differently. Credit unions consistently offer rates 1–3% lower than banks for similar credit profiles. (5) Secured vs. unsecured — pledging collateral (a car, savings account) usually yields a lower rate.
Should I pay off my loan early?
Paying off a loan early saves interest — but check for prepayment penalties first. Some lenders charge a fee (1–3% of remaining balance) for early payoff, which can negate the interest savings. If there is no penalty, extra payments go entirely to principal, reducing every future month's interest charge. The math strongly favors early payoff for high-rate loans (above 8%). For lower-rate loans (under 5%), you might generate better returns investing the extra money in an index fund than paying down the loan. Compare your loan's after-tax interest rate to expected investment returns to decide.
What is amortization and why does it matter?
Amortization is the process of spreading loan payments over time so each payment covers both interest and principal. In a fully amortizing loan, your payment stays constant but the allocation shifts: early payments are mostly interest, later payments are mostly principal. For a $20,000 loan at 8% for 5 years, your first payment of $405 includes $133 in interest and $272 in principal. Your last payment includes just $3 in interest and $402 in principal. This matters because extra payments made early in the loan life save the most interest — the same $1,000 extra payment saves more in year one than in year four.
Is it better to take a shorter or longer loan term?
Shorter terms mean higher monthly payments but much lower total cost. On a $15,000 loan at 9% APR: a 3-year term means $477/month and $2,172 total interest. A 5-year term means $311/month but $3,660 total interest — $1,488 more for the convenience of lower payments. Choose shorter if you can comfortably manage the higher payment. Choose longer if you need cash flow flexibility — but always try to make extra payments when possible to reduce total interest without committing to the higher required payment.