Personal Loan Payment Calculator
Estimate your monthly payments and total interest costs instantly.
How to Use the Personal Loan Calculator
Planning your finances requires precision. This personal loan calculator helps you determine the impact of interest rates and loan terms on your monthly budget. By inputting your loan details, you can see exactly how much of your money goes toward the principal versus interest.
Understanding the Formula
Personal loans usually use an amortized structure. The formula used to calculate your monthly payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
- P: Principal loan amount
- i: Monthly interest rate (Annual rate divided by 12)
- n: Total number of months (loan term)
Example: $15,000 Loan Comparison
Notice how changing the term length affects both your monthly commitment and the long-term cost of borrowing:
| Loan Amount | Interest Rate | Term | Monthly Payment | Total Interest |
|---|---|---|---|---|
| $15,000 | 8% | 36 Months | $470.05 | $1,921.80 |
| $15,000 | 8% | 60 Months | $304.15 | $3,249.00 |
Key Factors That Influence Your Loan Cost
1. Credit Score
Your credit score is the primary factor lenders use to determine your interest rate. Higher scores typically unlock "prime" rates, while lower scores may result in "subprime" rates, significantly increasing the total interest paid.
2. Loan Term
Short-term loans (24-36 months) usually have higher monthly payments but lower total interest. Long-term loans (60-84 months) offer lower monthly payments but can double or triple the amount of interest you pay over time.
3. Origination Fees
Many online lenders charge an origination fee (typically 1% to 8%). This is usually deducted from the loan proceeds. For example, on a $10,000 loan with a 5% fee, you will only receive $9,500 in your bank account, even though you are paying interest on the full $10,000.
FAQs About Personal Loans
What is a good interest rate for a personal loan?
A "good" rate depends on the current market, but typically anything below 10% is considered excellent for an unsecured personal loan.
Can I pay off my loan early?
Most modern personal lenders do not charge prepayment penalties, but you should always check your loan agreement to ensure you can save on interest by paying early.