How to use this loan calculator
Enter the loan amount you plan to borrow, the APR (or interest rate) the lender quoted you, and the term in months. The calculator returns the monthly payment, total interest paid over the life of the loan, and an amortization schedule showing how each monthly payment splits between interest and principal.
Use this calculator before committing to any loan to confirm the monthly payment fits your budget and to understand the total cost. The same loan amount can produce dramatically different lifetime costs depending on the rate and term — a $25,000 loan at 7% APR over 5 years costs about $4,700 in lifetime interest, while the same loan at 12% APR costs about $8,400. Over 7 years instead of 5, the 12% loan costs about $11,900.
The loan payment formula, explained
The standard formula for the monthly payment on a fixed-rate amortizing loan is:
M = P × [r(1+r)n] / [(1+r)n − 1]
Where M is the monthly payment, P is the loan principal, r is the monthly interest rate (annual APR ÷ 12, expressed as a decimal), and n is the total number of monthly payments (term in months). The calculator above applies this formula and produces both the monthly payment and the full amortization schedule.
Worked example: $20,000 personal loan
Suppose you borrow $20,000 at 9.99% APR over 5 years (60 months):
- Principal P = $20,000
- Monthly rate r = 9.99% ÷ 12 = 0.832% = 0.00833
- Number of payments n = 60
- Monthly payment M ≈ $425
- Total paid over 5 years ≈ $25,490
- Total interest ≈ $5,490
If the same loan were at 13.99% APR instead, the monthly payment would rise to about $465, and total interest would jump to about $7,930. This is why pre-qualifying with multiple lenders matters: a 4-percentage-point difference on a 5-year, $20,000 loan is roughly $2,400 in your pocket.
How to use the amortization schedule
The amortization schedule shows, for each monthly payment, how much goes to interest and how much goes to principal. In the early months of any amortizing loan, most of each payment is interest. As the principal balance shrinks, the interest portion of each payment shrinks and the principal portion grows.
This is why making extra payments early in the loan — when most of your payment is going to interest — has outsized impact on total interest paid. An extra $100 paid in month 6 reduces the balance the loan accrues interest on for the remaining 54 months. The same $100 paid in month 54 only avoids 6 months of interest on that $100.
Frequently asked questions
How is a loan payment calculated?
The standard amortization formula is: M = P × [r(1+r)^n] / [(1+r)^n − 1], where M is the monthly payment, P is the loan principal, r is the monthly interest rate (annual APR ÷ 12), and n is the total number of payments (term in months). The calculator above applies this formula automatically.
What is the difference between APR and interest rate?
Interest rate is the annual cost of borrowing the principal, expressed as a percentage. APR (annual percentage rate) includes the interest rate plus most fees (origination, discount points). APR is the more honest measure of all-in cost. Loans with origination fees can have APRs meaningfully higher than the headline rate.
How much can I save by paying extra on my loan?
Substantial. On a $25,000, 5-year personal loan at 10% APR, paying an extra $100/month reduces the term by roughly 14 months and saves around $1,400 in interest. The earlier you pay extra, the more you save — extra payments in year 1 reduce more interest than the same amount paid in year 5.
Should I take a longer term for a lower monthly payment?
Generally no, unless you cannot afford the shorter-term payment. Longer terms reduce the monthly payment but increase total interest substantially. A 7-year personal loan typically costs 50–80% more in lifetime interest than the same loan over 3 years.
Does this calculator account for fees?
No. The calculator computes pure principal-and-interest payments based on the rate and term you enter. To see the impact of an origination fee, reduce your loan amount by the fee percentage (e.g., on a $20,000 loan with a 5% origination fee, your effective borrowing is $19,000 of cash you receive, but you pay interest on the full $20,000).
What is amortization?
Amortization is the process of paying down a loan through equal periodic payments, where each payment includes both interest (on the remaining balance) and principal (reducing the balance). Early payments are mostly interest; later payments are mostly principal. The total payment stays constant for fixed-rate loans.
Related guides and calculators
- Best personal loans of 2026
- How to qualify for the lowest personal loan rate
- Personal loan vs. credit card
- Affordability calculator — for home loan affordability
- Refinance calculator — to compare an existing loan vs. a refinanced version
Disclaimer. This calculator is for educational purposes. Results are estimates based on the inputs you provide. Actual loan offers from lenders may include fees, mortgage insurance, prepaid interest, or other costs that this calculator does not model. Always verify your specific loan terms with the lender before signing.