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How to use the Loan Calculator
- 1Enter the amount you want to borrow.
- 2Enter the annual interest rate (APR) offered by your lender.
- 3Choose the loan term in years or months.
- 4See the monthly payment, total interest and the payment schedule.
How loan payments work
Most personal, auto and student loans are amortizing loans: you pay the same amount every month, and each payment covers that month's interest first with the rest reducing the balance. The formula is M = P × r(1 + r)^n / ((1 + r)^n − 1), where P is the loan amount, r the monthly rate and n the number of payments.
How to pay less interest
Choose the shortest term you can comfortably afford, improve your credit score before applying, and make extra payments toward principal whenever possible. Even one extra payment a year can cut months off a loan and save significant interest.
How the loan term changes what you pay
Here is the same $25,000 loan at 8% APR over three different terms. A longer term lowers the monthly payment, but the total interest more than doubles from 3 to 7 years.
| Term | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 3 years | $783.41 | $3,203 | $28,203 |
| 5 years | $506.91 | $5,415 | $30,415 |
| 7 years | $389.66 | $7,731 | $32,731 |
Before you sign
- Compare APR, not just the interest rate: APR includes origination fees.
- Check for prepayment penalties so you can pay the loan off early without extra cost.
- Use the extra payment field above: even $50 a month can cut months off the loan.
- Prequalify with several lenders; soft credit checks don't affect your score.
Frequently asked questions
What is APR?
APR (annual percentage rate) is the yearly cost of borrowing including interest and certain fees. Enter the APR from your loan offer for the most realistic estimate.
Can I use this as an EMI calculator?
Yes. EMI (equated monthly instalment) is the same thing as the monthly payment shown here.
Does a longer term save money?
A longer term lowers the monthly payment but increases the total interest you pay. Compare terms in the calculator to see the trade-off.
What is a good APR for a personal loan?
It depends on your credit. Borrowers with excellent credit can find single-digit APRs, while fair or poor credit can mean 20% or more. Compare at least three offers.