A personal loan can be a flexible way to finance large purchases, consolidate debt, or cover unexpected expenses. Understanding how your monthly payment is calculated is crucial for budgeting and choosing the right loan for your financial situation. This calculator helps you estimate your monthly payments based on the loan amount, annual interest rate, and loan term.
How the Calculation Works
The monthly payment for a personal loan is calculated using the standard annuity formula. This formula considers the principal loan amount, the interest rate, and the loan duration to determine a fixed monthly repayment amount. The formula is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]</code
M = Your total monthly loan payment
P = The principal loan amount (the amount you borrow)
i = Your monthly interest rate (annual interest rate divided by 12)
n = The total number of payments (loan term in months)
For example, if you borrow $10,000 at an annual interest rate of 7% for 36 months:
P = $10,000
Annual interest rate = 7%, so i = 0.07 / 12 = 0.005833
n = 36
Plugging these values into the formula will give you the estimated monthly payment.
Key Factors to Consider:
Loan Amount: The total sum you need to borrow. A larger amount will generally result in higher monthly payments and more interest paid over time.
Annual Interest Rate (APR): This is the cost of borrowing money. A lower APR means less interest paid. Your creditworthiness significantly impacts the APR you'll be offered.
Loan Term: The length of time you have to repay the loan. A longer term usually means lower monthly payments but more total interest paid. A shorter term means higher monthly payments but less total interest.
Fees: Some personal loans come with origination fees or late payment fees, which can increase the overall cost of the loan. This calculator focuses on the principal and interest.
Use this calculator to explore different scenarios and find a loan payment that fits comfortably within your budget. Remember to compare offers from multiple lenders to secure the best terms.
var loanAmountInput = document.getElementById("loanAmount");
var interestRateInput = document.getElementById("interestRate");
var loanTermInput = document.getElementById("loanTerm");
var interestRateValueSpan = document.getElementById("interestRateValue");
var loanTermValueSpan = document.getElementById("loanTermValue");
var resultDiv = document.getElementById("result");
// Update slider value display
interestRateInput.oninput = function() {
interestRateValueSpan.innerHTML = parseFloat(this.value).toFixed(1) + "%";
};
loanTermInput.oninput = function() {
loanTermValueSpan.innerHTML = this.value + " Months";
};
function calculateLoan() {
var principal = parseFloat(document.getElementById("loanAmount").value);
var annualRate = parseFloat(document.getElementById("interestRate").value);
var termMonths = parseInt(document.getElementById("loanTerm").value);
if (isNaN(principal) || principal <= 0) {
resultDiv.innerHTML = "Please enter a valid loan amount.";
return;
}
if (isNaN(annualRate) || annualRate <= 0) {
resultDiv.innerHTML = "Please enter a valid annual interest rate.";
return;
}
if (isNaN(termMonths) || termMonths <= 0) {
resultDiv.innerHTML = "Please enter a valid loan term.";
return;
}
var monthlyRate = annualRate / 100 / 12;
var numPayments = termMonths;
var monthlyPayment = 0;
if (monthlyRate === 0) {
monthlyPayment = principal / numPayments;
} else {
monthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) - 1);
}
if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
resultDiv.innerHTML = "Calculation error. Please check inputs.";
} else {
resultDiv.innerHTML = "$" + monthlyPayment.toFixed(2) + "Estimated Monthly Payment";
}
}
// Initial calculation on load
window.onload = function() {
calculateLoan();
};