About the Loan Calculator
A loan calculator turns an amount borrowed, an interest rate, and a term into a monthly payment and a total cost. It is the general-purpose version of every specific loan calculator, and it answers the two questions that matter before signing: what will I pay each month, and what will this cost in total?
The formula
M = P · [ r(1 + r)ⁿ ] / [ (1 + r)ⁿ − 1 ]P is the amount borrowed, r the monthly interest rate, and n the number of monthly payments. The same formula underlies mortgages, car loans, and personal loans.
How to use this calculator
- 1Enter your Loan Amount ($). The field starts at
10000, which you can overwrite. - 2Enter your Interest Rate (%). The field starts at
5, which you can overwrite. - 3Enter your Loan Term (Months). The field starts at
36, which you can overwrite. - 4Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Loan Amount ($) | 10000 |
| Interest Rate (%) | 5 |
| Loan Term (Months) | 36 |
Result
Monthly Payment: $299.71
Total Interest: $789.52
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
Term length has an effect most borrowers underestimate. Stretching a loan from three years to five lowers the monthly payment noticeably but raises total interest substantially, because you are borrowing the money for longer. Lenders often present the longer term as the more affordable option, which is true monthly and false overall.
The total interest figure is the one worth focusing on, since it is what the loan actually costs you. A 10,000 dollar loan at 5 percent over three years costs about 794 dollars in interest; the same loan over six years costs around 1,600. The monthly payment nearly halves while the cost doubles.
Things worth knowing
- Compare loans on APR rather than interest rate, since APR includes origination fees.
- Check for prepayment penalties before assuming you can pay off early without cost.
- A shorter term almost always costs less in total, even at the same rate.
- Your credit score drives the rate offered, and the difference between tiers can be several percentage points.
- Getting pre-qualified with a soft credit check lets you compare offers without damaging your score.
Frequently asked questions
How is a monthly loan payment calculated?+
Using the amortising loan formula, which spreads principal and interest evenly across the term. Each payment covers accrued interest first, with the remainder reducing the balance.
Does a longer term save me money?+
No. It lowers the monthly payment but increases total interest, often substantially, because you hold the debt for longer. Compare total cost, not just the monthly figure.
What is the difference between interest rate and APR?+
The interest rate determines your payment; APR includes lender fees expressed as an annual percentage. APR is the fair basis for comparing loans with different fee structures.
Can I pay off a loan early?+
Usually yes, and on a simple-interest loan it saves interest immediately. Check for prepayment penalties, which are uncommon but do appear on some products.