Calculate the monthly payment, total interest and total cost of any fixed-rate loan, such as a personal loan, home improvement loan or debt consolidation loan.
How loan payments are calculated
Most personal loans, auto loans and mortgages are amortizing loans: you pay the same amount each month, and each payment covers that month's interest plus part of the balance.
Payment = P × r ÷ (1 − (1 + r)−n)
P is the amount borrowed, r is the monthly rate (APR ÷ 12) and n is the number of payments.
Worked example
Borrowing $15,000 at 9% APR for 5 years gives a monthly payment of $311.38. Over 60 payments you repay $18,682.52, which includes $3,682.52 in interest.
If the lender charges a 5% origination fee taken out of the loan, you would receive only $14,250 but still repay the full $15,000 plus interest, so compare offers by APR, which includes fees.
How to get a cheaper loan
- Check your credit first. Better scores usually mean lower rates. Keep credit utilization low before you apply.
- Prequalify with several lenders. Many show estimated rates with a soft credit check that does not affect your score.
- Choose the shortest term you can afford. The payment is higher, but total interest falls sharply.
- Compare APR, not just the rate. The APR calculator shows how fees change the true cost.
Term length: payment versus total cost
| $15,000 at 9% | Monthly payment | Total interest |
|---|---|---|
| 3 years | $477.00 | $2,172 |
| 5 years | $311.38 | $3,683 |
| 7 years | $241.34 | $5,272 |
Frequently asked questions
Can I pay off a loan early?
Most personal loans allow it without a penalty, which saves interest. Check your loan agreement for prepayment penalties, then model extra payments with the loan payoff calculator.
What is a good interest rate on a personal loan?
It depends on your credit score, income and current market rates. Rates for excellent credit can be in single digits, while fair credit may see rates above 20%.
Related tools
Results are estimates for planning and education only. They are not financial, tax, legal or medical advice. Check important numbers with a qualified professional.