How to use this calculator
- Type the Loan amount you want to borrow.
- Enter the Interest rate (annual) and the Loan term in months.
- If the lender charges an origination fee, enter it as a percentage in Upfront fee.
- Compare Monthly payment, Total interest and, when a fee applies, the Effective APR.
The formula behind the payment
Most personal loans, car loans and student loans are fixed-payment loans: you repay the same amount every month until the balance reaches zero. Early payments are mostly interest; later ones are mostly principal.
M = P · r / (1 − (1 + r)^−n)- M = monthly payment
- P = amount borrowed
- r = monthly rate (annual rate ÷ 12 ÷ 100)
- n = number of monthly payments
The payment follows from the present value of an annuity. Total interest is simply the sum of all payments minus the amount borrowed.
Example: $15,000 at 11% over three years
A $15,000 loan at 11% over 36 months has a payment of $491.08. You repay $17,679 in total, so the loan costs $2,679 in interest.
Stretch the same loan to 60 months and the payment drops to $326.14, which looks easier on the budget. But total interest rises to $4,568, about $1,900 more. A longer term lowers the payment and raises the cost; it is a trade between monthly cash flow and total price.
What an upfront fee really costs
Some lenders deduct an origination fee from the money you receive while you still repay the full amount. On the same $15,000 loan, a 5% fee is $750. You get $14,250 but repay $17,679 in total.
The calculator solves for the rate at which your payments would repay what you actually received. Here that effective APR is 14.58%, not the 11% in the ad. When you compare offers, compare this effective rate, not the headline rate.
How to use the result
Pick the shortest term whose monthly payment you can pay without strain, and keep a buffer for months when money is tight. If you are consolidating debt, check that the new payment and total interest are really lower than what you pay now; a lower payment alone can hide a higher total cost.
For cards, use the credit card payoff calculator. For a car purchase with tax and a trade-in, the auto loan calculator handles those extras.
Ways to borrow for less
- Get quotes from banks, credit unions and online lenders; many let you check your rate without a hard credit inquiry.
- Borrow only what you need; each extra $1,000 adds interest as well as principal.
- Choose a loan without an origination fee, or confirm whether the fee is rolled into the amount.
- Check for prepayment penalties, then pay extra when you can; see the loan payoff calculator.
- Improve your credit score before applying if you can wait a few months.
Assumptions and limits
The calculator assumes a fixed rate, monthly payments, and interest that accrues monthly on the declining balance. It does not model variable rates, late fees, insurance add-ons, skipped payments, or loans whose interest is calculated daily or in advance.
A lender's disclosed APR and payment schedule are what count legally. Treat this page as a way to compare options before you apply.
Frequently asked questions
How do I calculate a monthly loan payment?
Divide the annual rate by 12 to get the monthly rate, then apply the annuity formula using the loan amount and the number of months. The calculator does this for you.
What is the difference between interest rate and APR?
The rate is the cost of borrowing the money; the APR also folds in certain fees so you can compare loans more fairly. Here the effective APR shows the effect of your upfront fee.
Is a longer loan term better?
It lowers the monthly payment but raises total interest. It helps cash flow, yet costs more overall.
Does paying off a loan early save money?
Yes, because interest is charged on the remaining balance. Check first that your loan has no prepayment penalty.