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Loan Calculator

Monthly payments, total cost and full amortization for any personal loan

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How to Calculate Loan Payments and Total Cost

Whether you're financing a home improvement, consolidating credit card debt, or covering a large expense, knowing the true cost of a personal loan before signing is essential. The monthly payment is just one piece — the total interest paid over the life of the loan often surprises borrowers.

This calculator covers the full picture: what your monthly payment will be, the maximum loan you can afford given a payment budget, how long it will take to pay off, and how much you save by paying extra each month. All calculations update instantly as you type.

Loan Payment Formula

M = P × [r(1+r)^n] / [(1+r)^n − 1]
P = principal, r = monthly rate (APR ÷ 12), n = months.
Example: $10,000 at 8% APR for 36 months → $313.36/month, $1,281 total interest.

Practical Example

A $15,000 personal loan at 12% APR for 48 months = $395/month. You'll pay $18,960 total — $3,960 in interest. Adding $75/month extra shortens the loan by 7 months and saves ~$600 in interest.

When to Use This Calculator

Personal loans are used for many purposes — knowing the true cost before borrowing is critical. Use this calculator in these common scenarios:

  • Debt consolidation: You have three credit cards with balances totaling $12,000 at an average 22% APR. A personal loan at 11% for 36 months costs $397/month and $2,292 in interest — vs. $440/month minimum payments and potentially $8,000+ in credit card interest if paid slowly.
  • Home improvement: A kitchen remodel costs $18,000. At 9.5% APR for 48 months = $453/month and $3,744 total interest. Weigh this against the expected home value increase.
  • Large purchase comparison: Is a 0% financing promotion from a retailer actually better than a personal loan? Often the "0%" deal requires purchasing a protection plan or has fees that raise the true cost.
  • Early payoff planning: Use the Early Payoff tab to see how much you save by adding $100/month extra to your current loan — often shortens the term by 6–12 months and saves hundreds in interest.

Full Amortization Example

Loan: $10,000 at 8% APR for 36 months

Step 1 — Monthly rate: 8% ÷ 12 = 0.6667%
Step 2 — Monthly payment = $10,000 × [0.006667 × (1.006667)^36] / [(1.006667)^36 − 1] = $313.36
Step 3 — Month 1: interest = $10,000 × 0.6667% = $66.67 | principal = $313.36 − $66.67 = $246.69
Step 4 — Month 36: interest = ~$2.08 | principal = $311.28 (almost all principal by end)
Step 5 — Total interest: $313.36 × 36 − $10,000 = $1,281

Notice how early payments are mostly interest and late payments mostly principal. Paying extra early has the biggest impact because it reduces the principal on which interest compounds.

Frequently Asked Questions

How do I calculate monthly loan payments? ▼
Monthly payment M = P × [r(1+r)^n] / [(1+r)^n − 1], where P = loan amount, r = monthly rate (APR ÷ 12), n = term in months. Each payment covers that month's interest first, then reduces principal. Early payments are mostly interest; later payments mostly principal — this is called amortization.
What is the total cost of a personal loan? ▼
Total cost = monthly payment × number of months. Total interest = total cost − original principal. On a $10,000 loan at 8% for 36 months: $313.36 × 36 = $11,281 total, meaning $1,281 goes to interest. Longer terms lower monthly payments but increase total interest paid significantly.
Does paying off a loan early save money? ▼
Yes, significantly. Extra payments reduce the principal balance, so less interest accrues each month. Even an extra $50/month on a 3-year loan can save hundreds in interest. Always check for prepayment penalties in your loan agreement before making extra payments — some lenders charge a fee.
What is the difference between interest rate and APR? ▼
The interest rate is the base cost of borrowing. APR (Annual Percentage Rate) includes the interest rate plus all lender fees (origination, processing). APR is always ≥ the stated rate and represents the true annual cost. When comparing loans, always compare APR — not just the headline interest rate.
What credit score do I need for a good personal loan rate? ▼
Credit scores above 720 qualify for the best rates (6–12% APR at most lenders). Scores of 660–719 typically get 12–18% APR. Below 640, rates often exceed 20%, and some lenders won't approve at all. Your debt-to-income ratio (keep it under 40%) and stable employment history also heavily influence approval and rate.
Should I choose a shorter or longer loan term? ▼
Shorter terms = higher monthly payments but dramatically less total interest. Longer terms = lower monthly payments but you pay much more over time. Rule of thumb: choose the shortest term where the monthly payment fits comfortably in your budget. Never stretch a term just to lower payments if you can afford the difference.
What is debt consolidation and when does it make sense? ▼
Debt consolidation combines multiple debts into a single loan — ideally at a lower interest rate. It makes sense when: (1) You have high-rate credit card debt (18–29%) and qualify for a personal loan at 8–12%. (2) You're managing multiple payment due dates and want simplicity. (3) Your credit score has improved since you originally borrowed. Example: consolidating $15,000 of 22% credit card debt into a 10% personal loan over 3 years saves roughly $4,200 in interest. Always check for prepayment penalties on existing debts and origination fees on the new loan.
How does a personal loan affect my credit score? ▼
Applying for a loan triggers a hard inquiry, temporarily lowering your score by 5–10 points. Once approved, the loan adds a new account, which can initially lower your average account age. However, consistently making on-time payments rebuilds your score — typically within 6–12 months. A personal loan also diversifies your credit mix (installment credit vs. revolving credit), which positively influences your score over time. The key: on-time payments are the single biggest factor in long-term credit health.
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