Loan Calculator

How the Loan Calculator Works

Our loan calculator helps you estimate monthly payments for personal loans, auto loans, student loans, and business loans. Simply enter the loan amount, interest rate, and loan term to see your monthly payment, total interest, and a full amortization schedule.

Loan Payment Formula

M = P × [ r(1+r)ⁿ ] / [ (1+r)ⁿ − 1 ]

• M = Monthly payment
• P = Principal (loan amount)
• r = Monthly interest rate (annual rate ÷ 12)
• n = Total number of payments

As a worked example, a $20,000 personal loan at 9% interest for 5 years (60 payments) has a monthly rate of 0.0075. Plugging into the formula gives a monthly payment of about $415.17. Over the life of the loan you'd pay $24,910 total, meaning $4,910 in interest. The amortization table shows exactly how that interest is distributed — heavy in the early years, lighter as the balance falls.

Types of Loans You Can Calculate

• Personal Loans: Unsecured loans for general use, typically 1–7 year terms.
• Auto Loans: Secured loans for vehicle purchases, typically 3–7 year terms.
• Student Loans: Education financing with varying terms and rates.
• Business Loans: Financing for business purposes with various structures.

Each loan type carries its own rate expectations. Personal loans are unsecured, so rates tend to be higher — often 6% to 36% depending on credit. Auto loans are secured by the vehicle, which keeps rates lower (typically 4% to 10% for strong credit). Federal student loans offer fixed rates set by Congress, while private student loans vary by lender. Business loan rates depend on the lender, the business's financials, and whether the loan is secured by collateral.

Understanding Amortization

Amortization is the process of spreading a loan repayment across equal installments over a set period. Each payment covers the interest accrued that month, and the remainder goes toward principal. Because interest is calculated on the remaining balance, the split shifts over time — your first payment is mostly interest, while your last payment is almost entirely principal. This is why the amortization table in the results shows interest declining and principal rising year by year.

Knowing this pattern opens up a powerful strategy: paying extra toward principal early in the loan has a much larger impact than the same extra payment made near the end. An extra $50 per month in the first year of a 5-year auto loan can shave months off the term and save a surprising amount of interest, because it reduces the balance on which all future interest is calculated.

Fixed vs. Variable Interest Rates

This calculator assumes a fixed rate, which stays the same for the entire term and makes your payment predictable. Variable-rate loans, by contrast, adjust periodically based on a reference rate such as the prime rate or SOFR. A variable rate can start lower than a fixed rate but may rise over time, increasing your payment. If you're considering a variable-rate loan, run the calculator at both the starting rate and a higher plausible rate to understand your exposure. For long-term loans, the predictability of a fixed rate is usually worth a small premium.

APR vs. Interest Rate

The interest rate is the cost of borrowing the principal. The annual percentage rate (APR) includes the interest rate plus certain fees — such as origination fees — expressed as a yearly rate. APR gives a more complete picture of what you'll actually pay, so when comparing loan offers, always compare APRs rather than headline rates. A loan with a 6% interest rate and a 2% origination fee has a higher APR than a loan with a 6.5% rate and no fees, even though the advertised rate looks lower.

Tips for Getting the Best Loan Terms

• Check and improve your credit score before applying.
• Compare offers from multiple lenders.
• Choose a shorter term to save on interest if you can afford higher payments.
• Consider making extra payments to pay off your loan early.
• Watch out for origination fees and prepayment penalties.

Two additional strategies can save real money. First, get prequalified with several lenders within a short window (usually 14–45 days) so the credit inquiries count as a single "rate shopping" event on your credit report. Second, ask whether the lender offers a rate discount for autopay — many will shave 0.25% to 0.50% off your rate, which compounds into meaningful savings over a multi-year loan.

Early Repayment and Prepayment Penalties

Paying off a loan early reduces total interest, but some lenders charge a prepayment penalty to recoup the interest they lose. These penalties are most common on mortgages and certain personal and auto loans, and they typically apply only in the first few years. Always read the loan agreement before making extra payments, and if a penalty exists, calculate whether the interest you'd save still outweighs the fee. In many cases it does — but it's worth confirming before you write the check.