About this calculator
Almost every consumer loan — auto loans, personal loans, most student loans — works the same way: you borrow a fixed amount, pay a fixed interest rate, and repay it in equal monthly installments. This calculator works for any of them. Enter the amount, the rate and the term, and you will see the payment, the total interest over the life of the loan, and how the balance falls each year.
The total interest figure is the one to watch. A lower monthly payment achieved by stretching the term usually means paying far more interest overall — on a $25,000 loan at 7.5%, stretching from 5 to 8 years cuts the payment by about $154 a month but adds roughly $3,264 in interest.
How to use it
- Enter the amount you plan to borrow.
- Enter the interest rate (APR) from your loan offer.
- Enter the term in years, then compare the total interest against a shorter term.
The formula
P is the loan amount, r is the monthly rate (annual rate ÷ 12) and n is the number of monthly payments. The same formula prices mortgages, auto loans and personal loans — only the typical rates and terms differ.
Worked example
Borrowing $25,000 at 7.5% for 5 years gives a monthly payment of $500.95. Over 60 payments you repay $30,056.92 in total, so the loan costs $5,056.92 in interest on top of the amount borrowed.
Frequently asked questions
What is a good interest rate for a personal loan?
It depends mainly on your credit score. In recent years borrowers with excellent credit (720+) have typically seen personal loan APRs around 6%–10%, while scores below 640 often mean 20% or more. Always compare the APR, not just the rate, because APR includes fees.
How does the loan term affect what I pay?
A longer term lowers the monthly payment but increases total interest, because the balance stays higher for longer. A shorter term does the opposite. Compare the "Total interest" figure at two or three terms before deciding.
Can I pay a loan off early?
Usually yes, and it saves interest because interest is charged on the remaining balance. Check your loan agreement for prepayment penalties — they are uncommon on auto and personal loans but do exist.
What is the difference between interest rate and APR?
The interest rate prices only the borrowed money. APR also folds in lender fees (such as origination fees), so it is the better number for comparing two loan offers. Try our APR Calculator to convert a rate-plus-fees offer into its APR.