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Loan Calculator

Calculate your monthly loan payment, total interest, and total cost. Compare up to 3 loan scenarios side by side. Supports fixed (annuity) and decreasing payment methods.

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Loan calculator. Monthly payment, total interest, and amortization schedule.
A loan calculator estimates your monthly payment and total interest by applying amortization formulas to your principal, rate, and term. It supports fixed-payment and decreasing-payment methods with a full repayment schedule and side-by-side offer comparison.

What Is a Loan Calculator?

A loan calculator is a financial tool that estimates your monthly payment, total interest cost, and full repayment schedule based on the loan amount, interest rate, and term. It works for any type of amortized loan, including personal loans, auto loans, student loans, and business loans.
Understanding the true cost of borrowing before you sign is critical. A $25,000 personal loan at 12% APR for 5 years costs $6,697 in total interest, meaning you repay $31,697 for the privilege of borrowing $25,000. That is a 26.8% markup on the original loan amount. A loan calculator makes these hidden costs visible upfront, so you can compare offers, adjust terms, and choose the option that fits your budget.
Most loans in the US use the fixed-payment method (also called French amortization or annuity method), where your monthly payment stays the same throughout the loan term. However, some lenders, particularly for business and international loans, offer a decreasing-payment method (linear amortization), where you pay equal principal each month plus declining interest. This calculator supports both methods and lets you compare them side by side.

How to Calculate Monthly Loan Payments

To calculate a fixed monthly loan payment, you need three inputs: the loan amount (principal), the annual interest rate, and the loan term in months or years. Here is the step-by-step process:
1. Convert the annual interest rate to a monthly rate by dividing by 12. For example, 8% annual becomes 0.08 / 12 = 0.00667 per month.
2. Determine the total number of payments. A 5-year loan has 60 monthly payments.
3. Plug these values into the loan payment formula (see below) to get the fixed monthly payment amount.
4. Multiply the monthly payment by the total number of payments to find the total amount you will repay.
5. Subtract the original loan amount from the total repaid to find your total interest cost.
For the decreasing-payment method (linear amortization), the calculation is simpler: divide the loan amount by the number of months to get the fixed principal portion, then add the interest on the remaining balance each month. The first payment is the highest, and each subsequent payment is slightly lower as the outstanding balance shrinks.
For example, a $20,000 auto loan at 6.93% for 60 months using the fixed-payment method costs $396 per month and $3,748 in total interest. The same loan using the decreasing-payment method starts at $449 per month but drops to $343 by the final payment, with total interest of $3,558 — saving $190 overall.

Loan Payment Formula

M=P×r(1+r)n(1+r)n−1M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1}
  • MM = The fixed monthly payment amount
  • PP = The loan principal (amount borrowed)
  • rr = The monthly interest rate (annual rate divided by 12)
  • nn = The total number of monthly payments
This is the standard amortization formula used for fixed-payment loans (French method). It ensures that each payment covers the interest due for that month and pays down a portion of the principal, with the balance reaching exactly zero after the final payment.
For the decreasing-payment method (linear amortization), each monthly payment is calculated as:
Mk=Pn+(P−P×(k−1)n)×rM_k = \frac{P}{n} + (P - \frac{P \times (k - 1)}{n}) \times r
Where k is the payment number (1 through n). The first term is the constant principal portion, and the second term is the declining interest on the remaining balance.
The total interest paid on a fixed-payment loan equals (M times n) minus P. For the decreasing-payment method, the total interest equals:
I=P×r×(n+1)2I = \frac{P \times r \times (n + 1)}{2}
The decreasing-payment method always results in less total interest because you repay principal faster in the early months. However, the higher initial payments require greater cash flow upfront.

Loan Payment Examples

Personal Loan: $15,000 for Debt Consolidation

You take out a $15,000 personal loan at 12.26% APR (the current US average as of March 2026) with a 3-year term. Using the fixed-payment method, your monthly payment is $500. Over 36 months, you repay a total of $18,014, with $3,014 going to interest. That means interest adds 20.1% to the original loan amount. If you can secure a better rate of 8.5% through a credit union, the same loan costs $474 per month and only $2,054 in total interest — saving you $960 simply by shopping around.

Auto Loan: $30,000 New Car at 6.93% for 5 Years

You finance a $30,000 new car at 6.93% APR for 60 months. With fixed payments, you pay $593 per month and $5,595 in total interest. Now suppose you make an extra $100 per month on top of your regular payment. You will pay off the loan in 49 months instead of 60, saving $1,118 in interest and freeing yourself from payments 11 months early. Even $50 extra per month saves $583 in interest and shortens the loan by 5 months. Extra payments are most impactful in the early years when the outstanding balance is largest.

Comparing Two Loan Offers Side by Side

You receive two personal loan offers for $20,000. Offer A: 10.5% APR for 4 years with no origination fee. Offer B: 9.2% APR for 5 years with a 2% origination fee ($400). At first glance, Offer B looks cheaper because of the lower rate, but the numbers tell a different story. Offer A costs $511 per month with $4,530 in total interest. Offer B costs $414 per month with $4,843 in total interest plus the $400 fee, totaling $5,243 in borrowing costs. Offer A saves $713 overall despite the higher rate, because the shorter term means less time for interest to accumulate. Always compare the total cost of the loan, not just the monthly payment or the interest rate alone.

Tips to Save Money on Your Loan

  • Compare at least 3-5 offers before committing. As of March 2026, personal loan rates range from 6.25% to 36% APR depending on creditworthiness, and even a 1-2% difference in rate can save hundreds or thousands of dollars over the life of the loan.
  • Choose the shortest term you can comfortably afford. A shorter loan term means higher monthly payments, but significantly less total interest. A $20,000 loan at 10% for 3 years costs $3,230 in interest; the same loan for 5 years costs $5,496 — 70% more interest for just 2 extra years.
  • Make extra payments when possible, even small ones. Paying an extra $50-100 per month on a $25,000 loan can save you $500-1,500 in interest and shorten your payoff date by several months. Apply extra payments to the principal, not to future payments.
  • Check for prepayment penalties before making extra payments. Some lenders charge fees for paying off your loan early. Avoid lenders with prepayment penalties whenever possible.
  • Look beyond the monthly payment when comparing offers. A lower monthly payment often means a longer term and more total interest. Always compare the total cost of the loan, including all fees and the total interest percentage (total interest divided by loan amount).
  • Improve your credit score before applying. Borrowers with excellent credit (740+) qualify for rates 5-10 percentage points lower than those with fair credit (580-669). Even a 50-point improvement in your score can unlock significantly better rates.
  • Consider the decreasing-payment method if your lender offers it. You will pay less total interest compared to the fixed-payment method because you reduce principal faster. The trade-off is higher payments at the start.

Frequently Asked Questions About Loan Payments

What is the monthly payment on a $10,000 loan?

The monthly payment on a $10,000 loan depends on the interest rate and term. At 8% APR for 3 years, the payment is $313 per month with $1,282 in total interest. At 12% APR for 5 years, the payment is $222 per month with $3,347 in total interest. A shorter term means higher payments but much less interest paid overall.

What is the difference between APR and interest rate?

The interest rate is the base cost of borrowing expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate plus certain fees, such as origination fees and closing costs, giving you a more accurate picture of the total borrowing cost. For example, a loan with a 9% interest rate and a 2% origination fee might have an APR of 10.2%. When comparing loan offers, always use APR for a fair apples-to-apples comparison.

What is amortization and how does it work?

Amortization is the process of paying off a loan through scheduled, regular payments over time. Each payment is split between interest and principal. In the early months, most of your payment goes toward interest. As the balance decreases, more of each payment goes toward principal. For instance, on a $20,000 loan at 8% for 5 years, the first payment of $406 includes $133 in interest and $273 in principal. By the final payment, only $3 goes to interest and $403 goes to principal.

How much interest will I pay over the life of my loan?

Total interest depends on three factors: the loan amount, interest rate, and term length. A $25,000 personal loan at 12% for 5 years costs $8,367 in total interest, which is 33.5% of the original loan amount. A useful metric is the Total Interest Percentage (TIP): divide your total interest by the loan amount to see what percentage extra you are paying. If the TIP exceeds 30-40%, consider a shorter term or a lower rate.

What is the difference between fixed-payment and decreasing-payment loans?

A fixed-payment loan (French amortization) has the same monthly payment throughout the entire term. A decreasing-payment loan (linear amortization) has a constant principal portion each month, but interest decreases as the balance shrinks, so total payments decline over time. The decreasing-payment method always costs less in total interest because you repay the principal faster. On a $30,000 loan at 7% for 5 years, fixed payments cost $5,940 in interest while decreasing payments cost $5,425 — a $515 difference.

Should I pay off my loan early with extra payments?

In most cases, yes. Extra payments reduce the principal balance, which reduces the interest you owe on all future payments. On a $20,000 loan at 10% for 5 years, adding $100 per month to your regular payment of $425 saves $1,745 in interest and pays off the loan 14 months early. However, first verify your lender does not charge prepayment penalties, and also consider whether that money would earn more if invested elsewhere.

How do I compare multiple loan offers fairly?

To compare loan offers fairly, use the same loan amount for each and compare these four metrics: APR (not just the interest rate), total interest paid over the full term, total cost including all fees (origination fees, service charges), and the monthly payment amount relative to your budget. A loan with a lower rate but longer term often costs more in total interest than one with a slightly higher rate but shorter term. Our comparison mode lets you enter up to 3 loan offers and see all these metrics side by side.

What are current average loan rates in the US?

As of March 2026, average US loan rates are approximately: personal loans at 12.26% APR (for a 700 FICO score, 3-year term), new auto loans at 6.93% APR (60-month term), used auto loans at 11-14% APR depending on credit, and federal student loans at 6.39% for undergraduates. Actual rates vary widely based on your credit score, loan amount, term, and lender. Borrowers with excellent credit (740+) can qualify for personal loan rates as low as 6-8%.

Key Loan Terms

Principal

The original amount of money borrowed, excluding any interest or fees. As you make payments, the principal balance decreases.

APR (Annual Percentage Rate)

The total annual cost of borrowing expressed as a percentage, including the interest rate plus most lender fees. APR gives a more accurate picture of loan cost than the interest rate alone.

Amortization

The process of gradually paying off a loan through regular scheduled payments that cover both interest and principal over the loan term.

Amortization Schedule

A detailed table showing each payment over the life of the loan, broken down into how much goes to principal and how much goes to interest.

Total Interest Percentage (TIP)

The total interest paid over the life of the loan expressed as a percentage of the loan amount. For example, paying $5,000 in interest on a $20,000 loan gives a TIP of 25%.

Prepayment Penalty

A fee some lenders charge if you pay off your loan before the scheduled end date. Not all loans have this penalty; always check before making extra payments.

Origination Fee

An upfront fee charged by some lenders for processing a new loan, typically 1-8% of the loan amount. It is usually deducted from the loan proceeds before you receive them.