Loan Calculator
Monthly payment and total interest for any fixed-rate installment loan — personal, auto, student, or home equity. Understand what you are actually agreeing to before you sign.
Calculate any loan payment
The one formula every borrower should understand
Every fixed-rate installment loan — personal loan, auto loan, student loan, home equity loan — runs on the same underlying math. The lender sets a payment that stays identical every month and brings the balance to exactly zero on the last payment. Nothing complicated, nothing hidden. The formula is:
P is the amount borrowed, r is the monthly rate (annual rate ÷ 12), and n is the number of months. What makes it feel like magic is that the split between interest and principal changes every single month — early payments are mostly interest, late payments are mostly principal — but the total payment never moves. Understanding this prevents a lot of expensive surprises.
The term trap: why lower payments can cost thousands more
This is the most important thing to understand about any loan. Run these three scenarios on a $25,000 personal loan at 9% APR:
3-year term: Payment $795/month. Total interest: $3,619. Total cost: $28,619.
5-year term: Payment $519/month. Total interest: $6,126. Total cost: $31,126. You save $276/month but pay $2,507 more in interest.
7-year term: Payment $391/month. Total interest: $7,847. Total cost: $32,847. You save $404/month but pay $4,228 more in interest — more than 17% of the original loan amount, just to stretch the term.
Lenders love offering longer terms because the payment looks more affordable. That is also true that a longer term costs you real money. The question to ask is not whether you can afford the payment but whether the total cost makes sense given what the interest adds up to.
How a rate difference of 2% plays out over five years
Credit matters more than most people realize. On a $20,000 loan for 5 years:
At 7% APR (excellent credit, credit union): payment $396/month, total interest $3,761.
At 9% APR (good credit, bank): payment $415/month, total interest $4,907.
At 15% APR (fair credit, online lender): payment $476/month, total interest $8,556.
That 8-point difference in rate costs you an extra $4,795 on a $20,000 loan. Get pre-approved by your bank and at least one credit union before accepting any offer. Credit unions in particular routinely beat banks by 1–3 points on personal loans.
Where each loan type fits
Personal loans are unsecured — no collateral — which is why rates are higher than mortgages or auto loans. Best for debt consolidation, large purchases, or emergency expenses. Rates run roughly 7–30% depending heavily on credit score.
Auto loans are secured by the vehicle. Use the Auto Loan Calculator for those — it handles sales tax, trade-in, and the specific term structures dealers offer.
Home equity loans work here too. They are secured by your home, so rates are lower, but defaulting has severe consequences. Model the payment carefully and maintain a cash buffer.
Three ways to pay less interest — all of them work
Shorten the term. The most powerful lever. Fewer months means less time for interest to compound against you, and more of every payment hits principal from month one.
Improve your rate. A 1-point rate difference on a $25,000 five-year loan is about $700 in interest. Getting pre-approved by two or three lenders takes a few hours and gives you a number everyone has to beat. Never accept the first offer on a loan this size without shopping it.
Make extra principal payments. Most personal and auto loans allow prepayment without penalty — confirm yours does. Extra payments applied to principal shorten the loan and cut total interest. Even adding $50 to your monthly payment on a 5-year loan saves months and hundreds of dollars.
Frequently asked questions
What is a good personal loan rate in 2026?
Excellent credit (750+) typically qualifies for 7–12%. Good credit (680–749) lands in the 12–18% range. Below 650, expect 20–30%+. Credit unions consistently beat banks by several points. Compare APRs, not just rates — origination fees affect the real cost.
Should I take a longer term to lower my payment?
Only if the cash flow is genuinely necessary. Calculate the total interest for both terms — the difference is usually thousands of dollars. If the shorter term is within reach, it is almost always the better financial choice.
Can I pay off my loan early without penalty?
Most personal loans allow early payoff without penalties — read the loan agreement to confirm. Extra payments toward principal reduce the balance immediately, cutting both future interest and the remaining term.
Why does my payment differ slightly from the lender quote?
Origination fees rolled into the loan, the exact date interest begins accruing, and rounding all create small differences. A few dollars per month is normal. If the gap is $20 or more, ask the lender to walk through the exact loan amount and all fees in writing.
Should I consolidate my credit cards into a personal loan?
If the personal loan rate is meaningfully lower than your card rates, debt consolidation makes financial sense. The risk: if you continue using the cards after consolidating, you have added debt rather than solved it. The loan only helps if the cards stay at or near zero.
Related: Auto Loan Calculator · Debt Payoff Calculator · APR Calculator