Personal Loan Calculator
Estimate the monthly payment, total interest, and payoff on a personal loan. Enter the amount, rate, and term to see a full year-by-year breakdown.
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $4,416 | $1,562 | $10,584 |
| 2 | $4,976 | $1,002 | $5,608 |
| 3 | $5,608 | $371 | $0 |
Assumes a fixed-rate, fully amortizing loan with no origination fee. APR shown by lenders may include fees.
How to use this calculator
Enter three inputs to get a complete loan picture:
- Loan amount — the amount you plan to borrow, before any origination fee is deducted
- Interest rate (APR) — use the APR quoted by your lender for the most accurate comparison
- Term — the repayment period in months (e.g., 24, 36, 48, or 60 months)
The calculator returns your fixed monthly payment, the total interest you'll pay over the life of the loan, the total amount repaid, and a year-by-year breakdown showing how much of each year's payments goes to principal versus interest, along with the remaining balance. Try different terms to see the trade-off between monthly payment size and total cost.
How personal loans work
Personal loans are typically unsecured, fixed-rate, and fully amortizing. Unsecured means no collateral is required — the loan is backed by your creditworthiness alone. Fixed-rate means the interest rate and monthly payment stay the same for the entire term. Fully amortizing means equal payments fully retire the debt by the last payment.
Because there's no collateral, lenders price personal loans primarily on your credit score, income, and existing debt load. Borrowers with excellent credit and low debt-to-income ratios typically receive the lowest rates; those with thinner credit histories or higher existing debt pay more. This means that improving your credit before applying — even by a few score points — can meaningfully reduce your rate and total interest cost.
Common uses for personal loans include debt consolidation, home improvement, medical expenses, and large one-time purchases. They are generally not advisable for ongoing expenses, since borrowing to cover routine costs can lead to a cycle of debt.
Worked example — step by step
Suppose you borrow $15,000 at 12% annual interest for 36 months:
- Monthly rate: 12% ÷ 12 = 1.0%
- Monthly payment: $15,000 × [0.01 × (1.01)³⁶] ÷ [(1.01)³⁶ − 1] ≈ $498/month
- Total paid: $498 × 36 = $17,928
- Total interest: $17,928 − $15,000 = $2,928
In month 1: interest = $15,000 × 1% = $150; principal = $498 − $150 = $348; new balance = $14,652.
In month 36: interest ≈ $4.93; principal ≈ $493; balance = $0.
Now compare: the same $15,000 at 12% over 24 months raises the payment to about $706/month, but total interest drops to roughly $1,944 — saving about $984 by paying it off a year earlier. If budget allows, the shorter term is almost always the better financial choice.
How to interpret your result
Your monthly payment is the number to check against your budget. A common guideline is to keep all debt payments (personal loan, car, student loans, and minimum credit card payments) below 36–43% of gross monthly income. If the payment pushes you over that threshold, consider borrowing less or extending the term.
The total interest figure reveals the true cost of the loan beyond the principal. When comparing offers from multiple lenders, always compare total interest (or APR) rather than just monthly payments. A lender offering a lower payment via a longer term may cost more overall than a lender with a slightly higher payment on a shorter term.
Common mistakes to avoid
- Choosing the lowest monthly payment without checking total cost. A 72-month loan looks attractive because of the small payment, but the total interest on a 72-month loan at 15% is dramatically more than on a 36-month loan at the same rate. Run both scenarios in the calculator.
- Ignoring the origination fee. Some lenders deduct a 1–8% origination fee from the loan before disbursing funds. If you borrow $15,000 with a 5% origination fee, you receive $14,250 but still repay $15,000. Factor this into your true borrowing cost when comparing lenders.
- Applying to multiple lenders with hard inquiries too close together. Each hard credit pull can temporarily lower your score slightly. Use prequalification (soft pull) tools first to compare rates before submitting formal applications.
- Not reading the prepayment terms. Most personal lenders allow early payoff without penalty, but some charge a fee. Confirm before planning to make extra payments.
- Using a personal loan for a purchase that has better-suited financing. For a car, auto loan rates are typically lower. For home improvements, a home equity loan or HELOC may offer a lower rate. Personal loans are best when no secured option fits.
The formula
Payment = P × [ r(1 + r)n ] ÷ [ (1 + r)n − 1 ]
Where: P = loan amount (principal), r = monthly interest rate (annual rate ÷ 12), n = total number of monthly payments.
Interest portion of any payment = remaining balance × r. Principal portion = Payment − Interest.
How we calculate this
Monthly payment is computed using the standard fixed-rate amortization formula: Payment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments. Total interest equals total payments minus principal. The year-by-year schedule applies this formula period by period, tracking the declining balance and the shifting interest/principal split.
Sources
Frequently asked questions
How are personal loan payments calculated?
A personal loan is fully amortizing: you pay a fixed amount each month that covers interest on the remaining balance plus some principal. The fixed payment is calculated using the standard amortization formula. Early payments are more interest; later payments are more principal. By the final payment, the balance is exactly zero.
What's the difference between interest rate and APR on a personal loan?
The interest rate is the cost of borrowing the principal, expressed as a yearly percentage. APR (annual percentage rate) includes the interest rate plus certain fees — most commonly an origination fee, which some lenders charge upfront. APR is usually slightly higher than the rate and is the better number for comparing loan offers from different lenders.
Does paying off a personal loan early save money?
Usually yes — paying extra reduces the principal balance faster, so less interest accrues on future payments. Check that your lender doesn't charge a prepayment penalty; most reputable personal lenders don't, but it's worth confirming in your loan agreement. Even one or two extra payments a year can cut interest meaningfully.
What term should I choose for a personal loan?
Shorter terms (12–24 months) mean higher monthly payments but significantly less total interest. Longer terms (48–72 months) lower the payment but cost more overall. A sound approach: pick the shortest term whose payment comfortably fits your budget without straining other financial obligations.
What credit score do I need for a good personal loan rate?
Lenders vary, but generally a credit score above 700 qualifies for competitive rates, while scores above 750 tend to unlock the lowest available rates. Borrowers with scores below 640 may face significantly higher rates or difficulty qualifying. Shopping multiple lenders and comparing APRs is especially important if your credit is in the middle range.
Can I use a personal loan to consolidate debt?
Yes — debt consolidation is one of the most common uses for personal loans. If your personal loan rate is lower than the rates on your existing balances (especially credit cards), consolidating can reduce your total interest and simplify your payments to one fixed monthly amount. The key is not to run the credit cards back up after paying them off.
Is a personal loan secured or unsecured?
Most personal loans are unsecured, meaning you don't pledge collateral. Because the lender bears more risk, unsecured loans typically carry higher rates than secured loans (like auto loans or home equity loans). Some lenders do offer secured personal loans backed by a savings account or other asset, which may carry a lower rate.
What happens if I miss a personal loan payment?
Missing a payment can result in late fees, a potential increase in your interest rate (if your loan agreement allows it), and a negative mark on your credit report if the payment is 30 or more days late. If you anticipate difficulty making a payment, contact your lender early — many offer hardship plans or temporary deferment options.