Loan Calculator
Monthly payment, total interest, full amortization, plus an early-payoff scenario showing months and interest saved by adding to each payment.
Result
- Total of payments$30,056.92
- Total interest$5,056.92
- Principal$25,000.00
- Number of payments60
How to use this calculator
- Enter the loan amount you want to borrow (the principal).
- Type the lender's quoted APR — match the period (annual) shown on your offer.
- Set the term in years; results refresh as you type.
- Compare a shorter term to see lifetime interest savings.
About this tool
Use the loan calculator to figure out the true cost of any fixed-rate installment loan. Enter the amount you want to borrow, the annual percentage rate (APR) the lender quoted, and the term in years — the calculator immediately shows the monthly payment, the total amount you'll pay back, and how much of that is pure interest. The math uses the standard amortization formula, the same one banks use, so the numbers match what you'll see on a paper offer. Slide the term shorter to see how much interest you save; nudge the rate to see what an extra half-percent really costs.
What this calculator does
This calculator returns the monthly payment, total interest, and full lifetime cost of any fixed-rate, fully-amortizing installment loan — personal, auto, student, or any other consumer credit product whose schedule clears the balance to zero by the final scheduled payment. It uses the standard amortization formula required by the Truth in Lending Act and lets you flex the term shorter and the rate up or down by 1% to see how lifetime interest moves. Variable-rate, balloon, and interest-only loans are not modelled — those need different math.
How it works — the formula
Payment M = P · r(1+r)ⁿ / ((1+r)ⁿ − 1); APR = rate that equates payments to net cash advanced (per Reg Z App J)P is the financed amount, r is the periodic rate (annual ÷ payments per year), and n is the number of scheduled payments. The Truth in Lending Act mandates lenders disclose APR — a figure that folds finance charges (origination fees, mortgage insurance, certain points) into the periodic rate per the algorithm in 12 CFR §1026 Appendix J. APR is what makes two loans with different fees genuinely comparable.
Worked examples
- Inputs:
- P = $20,000, rate = 8%, term = 60 months
- Output:
- Monthly ≈ $405.53; total interest ≈ $4,332
Total interest is ~22% of principal — a typical figure for an 8% unsecured personal loan at 60 months.
- Inputs:
- P = $35,000, rate = 6.5%, term = 72 months
- Output:
- Monthly ≈ $588.35; total interest ≈ $7,361
Stretching the term from 60 to 72 months drops the payment but adds ~$1,400 in lifetime interest. Borrowers also stay underwater on the vehicle longer.
- Inputs:
- P = $30,000, rate = 5%, term = 120 months
- Output:
- Monthly ≈ $318.20; total interest ≈ $8,184
Federal student loans use simple-daily-interest accrual; this monthly-periodic figure is within 1–2% of the true federal schedule.
What a loan calculator does
A loan calculator computes the monthly payment on a fixed-rate installment loan given the amount borrowed, the annual percentage rate, and the loan term in months. It is the same underlying math regardless of what the loan finances — personal loan, auto loan, mortgage, HELOC, or student loan. The differences between loan types come from term length, typical rates, fees, and legal disclosure requirements, not from the payment formula itself.
This calculator is a general-purpose fixed-rate loan calculator. It handles the standard case where you borrow a lump sum today and pay it back in equal monthly installments over a fixed term. For loans with special features — mortgages with escrow for taxes and insurance, auto loans with trade-in mechanics, credit cards with revolving balances — use the dedicated calculator for that loan type.
The amortization formula
The monthly payment formula for a fixed-rate loan follows from setting the present value of the payment stream equal to the loan amount at the loan's interest rate:
M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)M is the monthly payment. P is the loan principal (amount borrowed). r is the monthly interest rate (annual rate ÷ 12, as a decimal). n is the number of monthly payments.
M = 25000 × 0.00667 × 1.489 ÷ 0.489Monthly rate is 0.08/12 = 0.006667. (1.006667)^60 = 1.4898. Numerator: 25000 × 0.006667 × 1.4898 = 248.30. Denominator: 0.4898. Monthly payment M = $506.91. Total paid: 60 × $506.91 = $30,414.86. Total interest: $5,414.86.
APR vs interest rate — reading the disclosure
The interest rate is the periodic charge applied to your outstanding balance. The APR (Annual Percentage Rate) is the interest rate PLUS any lender-charged fees, expressed as an annualized rate. For loans with no origination or discount fees, APR equals interest rate. For loans with fees, APR is higher.
Federal Truth in Lending requires every consumer lender to disclose the APR on your loan agreement. When comparing loans from different lenders, always compare APR to APR — not rate to rate. A lender quoting a "great rate" of 6% while charging a $2,000 origination fee has a higher APR than a lender at 6.5% with no fee, on a $30,000 5-year loan.
Loan types and typical terms (2026)
Different loan types have systematically different rates because they carry different risk profiles for the lender.
| Loan type | Typical term | Typical APR | Secured by |
|---|---|---|---|
| Personal loan (unsecured) | 24 – 84 months | 9% – 20% | Nothing |
| Auto loan (new car) | 36 – 84 months | 6% – 9% | Vehicle |
| Auto loan (used car) | 36 – 84 months | 8% – 12% | Vehicle |
| Mortgage (30-year fixed) | 360 months | 6% – 7.5% | Real estate |
| Home equity loan / HELOC | 60 – 240 months | 7% – 10% | Real estate equity |
| Federal student loan (subsidized) | Up to 25 years | 5% – 7% | Nothing (guaranteed) |
| Private student loan | Up to 20 years | 6% – 15% | Nothing |
| Credit card | Revolving | 18% – 30% | Nothing |
Fixed vs variable rate
Fixed-rate loans lock in the interest rate at origination. Every monthly payment is identical from month one through the final payment. This calculator assumes fixed-rate; the formula does not model variable rate.
Variable-rate loans (adjustable-rate mortgages, most HELOCs, and some private student loans) tie the rate to an underlying index like SOFR or Prime plus a margin. Payments can change as rates move. Variable rates often start lower than comparable fixed rates but carry rate-rise risk over the loan's life.
The trade-off: fixed protects against rate increases and gives payment certainty; variable exposes you to rate increases but benefits if rates fall. In a rising-rate environment (like 2022-2024) fixed was clearly the safer choice; in a falling-rate environment variable can save real money.
The effect of credit score on rate
Credit score is the single largest factor determining your loan rate. FICO score bands map roughly to interest rate tiers: 800+ (super-prime) gets the best rates published by any lender; 740-799 (prime) gets rates 0-1 point above super-prime; 670-739 (near-prime) gets rates 1-3 points above; 580-669 (subprime) gets rates 3-8 points above; below 580 (deep subprime) gets rates 8-15 points above prime, when approved at all.
The dollar impact is large. On a $25,000 5-year personal loan, moving from 620 credit (subprime, ~18% APR) to 750 credit (prime, ~10% APR) drops the monthly payment from $635 to $531 and cuts total interest from $13,100 to $6,850. Improving your credit score before applying for a large loan is one of the highest-return "financial moves" available to most consumers.
Prepayment — when it pays off
Making extra payments toward principal on a fixed-rate loan reduces total interest and shortens the payoff. On a $25,000 loan at 8% for 60 months, adding $100/month to the required $506.91 payment cuts total interest from $5,415 to $4,206 (saves $1,209) and pays the loan off ~9 months early.
The catch: most modern US personal loans and mortgages have no prepayment penalty, but some subprime and older loans do. Always check the loan agreement before making large prepayments. If a prepayment penalty exists, the break-even calculation may reverse — the penalty can exceed the interest saved.
When NOT to take a loan
Loans move consumption forward in time at the cost of paying interest. That trade is worth making for productive investments (education that raises earning power, a home that appreciates, a car needed to get to work). It is rarely worth making for consumption that could wait (vacations, luxury goods, non-essential purchases).
A rough test: if you can pay off the loan with under 20% of your monthly take-home pay AND the loan finances something that generates value beyond the loan's life, it is probably a healthy loan. If either fails, reconsider.
Alternatives to loans worth considering first: emergency savings (for unexpected expenses), employer 401(k) loan (for medium-term needs, if you are staying with the employer), family loans (with a written promissory note), and delaying the purchase until you can save for it in cash.
When to use this vs other tools
Loan Calculator is the general-purpose amortization tool. Use one of the specialised tools when the loan type has extras this one does not model.
- Mortgage Calculator
Use for a home loan — Mortgage Calculator adds property tax, home insurance, and a PMI advisory, all of which materially affect the real monthly figure.
- Car Loan Calculator
Use for an auto loan — Car Loan Calculator handles trade-in value, dealer-financing quirks, and the 36-to-84-month term range typical of vehicle finance.
- Personal Loan Calculator
Use for an unsecured personal loan when origination fees are material — Personal Loan Calculator factors the origination-fee deduction into the true APR.
- Refinance Calculator
Use after you have an existing loan and rates have moved — Refinance Calculator returns break-even months on closing costs vs the new monthly savings.
Authority note
Appendix J of Regulation Z prescribes the exact algorithm every US lender must use to compute APR. That makes the monthly-payment math in this calculator directly comparable to the Truth-in-Lending disclosure on any consumer-loan offer.
Limitations
- Variable-rate, balloon, and interest-only loans require different formulas and are not modeled.
- Origination fees, prepayment penalties, late fees, and servicing fees are not included in the basic interest-rate calculation — request the lender's APR for the full cost.
- Federal student loans use simple-daily-interest accrual rather than monthly periodic compounding; results differ by 1–2% over multi-year payoffs.
- Late or skipped payments add capitalized interest that is not modeled here.
Loan calculations are estimates. This calculator does not provide financial advice — confirm figures against the lender's federally-required Truth in Lending disclosure before signing.
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