How to use this loan calculator
- Loan amount — the amount you borrow, not including any interest.
- Interest rate — the yearly rate on your loan offer. Use the APR if you have it, because it includes most lender fees.
- Loan term — how long you have to repay, in years or months.
- Extra payment (optional) — any amount you plan to add each month. The calculator shows how much sooner you finish and how much interest you avoid.
The results update as you type. Open the amortization schedule to see, year by year or month by month, how each payment splits between principal and interest. For a vehicle with a trade-in and sales tax, use the car loan calculator.
How the monthly payment is calculated
Most personal loans, car loans and student loans are amortizing loans: you pay the same amount every month, and each payment covers that month’s interest first, with the rest reducing your balance. The payment is set so the balance reaches exactly zero on the last month. The formula is:
Worked example: borrow $25,000 at 7.5% for 5 years (60 payments). Here (1.00625)60 ≈ 1.4533, so the payment is $25,000 × 0.00625 × 1.4533 ÷ 0.4533 = $500.95 a month. Over 60 months you pay $30,056.92 in total, which means the loan costs $5,056.92 in interest.
Why early payments are mostly interest
Interest is charged on whatever you still owe, so it is highest at the start. In the example above, the first month’s interest is $25,000 × 0.00625 = $156.25, leaving $344.70 to reduce the balance. By the final year, the balance is small and nearly the whole payment goes to principal:
| Year | Principal paid | Interest paid | Balance left |
|---|---|---|---|
| 1 | $4,281.58 | $1,729.81 | $20,718.42 |
| 2 | $4,613.97 | $1,397.42 | $16,104.46 |
| 3 | $4,972.16 | $1,039.22 | $11,132.29 |
| 4 | $5,358.16 | $653.22 | $5,774.13 |
| 5 | $5,774.13 | $237.25 | $0.00 |
This is why extra payments made early in a loan save the most: every extra dollar stops interest from being charged on it for the rest of the term.
How much do extra payments save?
Using the same $25,000 loan at 7.5% for 5 years:
- $50 extra a month pays the loan off in 54 months instead of 60 and saves $564.42 in interest.
- $100 extra a month pays it off in 49 months and saves $1,013.61.
Before you pay extra, check your loan agreement for a prepayment penalty, and ask your lender to apply the extra amount to principal rather than to next month’s payment.
Shorter or longer term?
A longer term lowers the monthly payment but raises the total cost. For the same $25,000 at 7.5%:
| Term | Monthly payment | Total interest |
|---|---|---|
| 3 years | $777.66 | $2,995.60 |
| 5 years | $500.95 | $5,056.92 |
| 7 years | $383.46 | $7,210.38 |
Stretching from 5 to 7 years saves about $117 a month but costs over $2,150 more. A good rule: choose the shortest term whose payment fits your budget with room to spare.
What this calculator does not include
- Origination fees, insurance or other charges added to the loan (use the APR to account for most of these).
- Variable-rate loans, whose payments change when rates move.
- Interest-only periods or balloon payments.
For a deeper explanation, read our guide how loan interest is calculated.
Frequently asked questions
Can I use this for a car loan, personal loan or student loan?
Yes. Any loan with a fixed rate and equal monthly payments works the same way. For a home loan with property tax and insurance, use the mortgage calculator instead.
What is the difference between the interest rate and the APR?
The interest rate is the cost of borrowing the money itself. The APR (annual percentage rate) adds most required fees and expresses the total as a yearly rate, which makes it the better number for comparing offers.
A lender quoted me a “flat rate”. Is that the same?
No. A flat (or add-on) rate charges interest on the full original amount for the whole term. A 7.5% flat rate on $25,000 over 5 years costs $9,375 in interest — a payment of $572.92 — which is about the same as a 13.3% APR on an amortizing loan. Always ask for the APR.
Why doesn’t my lender’s figure match exactly?
Lenders may round each payment, count interest daily rather than monthly, or include fees. Differences are usually a few cents to a few dollars a month. Your loan agreement is the final word.
Can I save my calculation?
Members can save any calculation and reopen it later from their account. The calculator itself is free for everyone, with instant results and no sign-up. See membership.
Results are estimates for educational purposes and are not financial advice. See our disclaimer.