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Loan Calculator

Calculate loan payments, total interest, and amortization schedules. Compare different loan terms and payment frequencies to find the best option for your budget.
Decision Context
Page-specific guidance for using this result in a real planning decision.

This page helps you compare repayment options for personal, auto, student, or general installment loans using payment amount, term, and interest assumptions.

Use it when you need to decide whether a shorter term, lower rate, or different payment frequency is more important for your budget.

Focus on both the periodic payment and the total interest cost, because a comfortable monthly payment can still hide an expensive borrowing decision over the full term.

Methodology, assumptions, and limitations

For an amortizing loan, the periodic rate and number of payments are applied to the principal to estimate a level payment. Total interest is the sum of scheduled payments minus the original principal.

Assumptions
  • The rate is fixed for the full term.
  • Payments are equal and made on schedule.
  • No additional fees or prepayments are included unless entered.
Limitations
  • APR can differ from the stated interest rate because it may include fees.
  • Variable-rate and balloon loans need additional terms.
  • Rounding by a lender can slightly change the final payment.

Sources and standards

Related calculators

Mortgage CalculatorAmortization Calculator
Calculator
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Analysis
Interpretation of the current calculator output

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How to Use

Step-by-step instructions
  1. 1Enter the loan amount you want to borrow
  2. 2Input the annual interest rate
  3. 3Set the loan term in years
  4. 4Choose your payment frequency
  5. 5Review your monthly payment and total interest
  6. 6Compare different loan terms to find the best option

Loan Payment Formula

This formula calculates the fixed payment amount for a loan with constant payments and a constant interest rate.
PMT = P × [r(1+r)^n] / [(1+r)^n - 1]

Variables:

PMTPayment amount per period
PPrincipal loan amount
rInterest rate per period
nTotal number of payments

Example

Calculating a Personal Loan

Inputs:

Loan Amount:$25,000
Interest Rate:6.5% annually
Loan Term:5 years
Payment Frequency:Monthly

Steps:

  1. 1.Calculate periodic rate: 6.5% ÷ 12 = 0.5417% per month
  2. 2.Calculate total payments: 5 years × 12 = 60 payments
  3. 3.Apply PMT formula: 25,000 × [0.005417(1.005417)^60] / [(1.005417)^60 - 1]
  4. 4.Calculate: 25,000 × [0.005417 × 1.383] / [1.383 - 1]
  5. 5.Result: Monthly payment = $487.15
Result:
Monthly Payment: $487.15 | Total Interest: $4,229 | Total Payment: $29,229

Frequently Asked Questions

What's the difference between interest rate and APR?

Interest rate is the cost of borrowing the principal, while APR (Annual Percentage Rate) includes additional fees and costs. APR gives you a more complete picture of the loan's true cost.

Should I choose a shorter or longer loan term?

Shorter terms have higher monthly payments but lower total interest costs. Longer terms have lower monthly payments but higher total interest. Choose based on your monthly budget and long-term financial goals.

How does payment frequency affect my loan?

More frequent payments (bi-weekly vs monthly) can reduce total interest and pay off the loan faster. However, make sure the payment schedule fits your cash flow.

Can I pay extra on my loan?

Yes, making extra payments toward the principal can significantly reduce total interest and pay off the loan faster. Check with your lender about prepayment policies.
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