Loan Calculator
Calculate monthly payments for any personal, auto, or other loan.
| Year | Payment | Principal | Interest | Balance |
|---|
How Our Loan Calculator Works
A loan is a contract: a lender gives you a lump sum (the principal) and you repay it in fixed monthly installments over a set term. Each payment is split between interest (the lender's fee for the money) and principal (chipping away at what you owe). This is called an amortized loan — the same structure used for personal loans, auto loans, most student loans, and fixed-rate mortgages.
Our calculator uses the standard PMT formula to compute the monthly payment from three inputs: loan amount, annual interest rate, and term in years. It then builds a full year-by-year amortization schedule so you can see exactly how the balance shrinks, how much interest accrues each year, and how the principal share grows as you approach the payoff date.
Everything runs client-side — no data leaves your browser. You can change any input and see the new payment, total interest, and schedule instantly. Share the URL to send your scenario to someone else; the numbers are encoded in the query string.
The Loan Payment Formula
PMT— the fixed monthly paymentP— principal (the amount you borrow)r— monthly interest rate (annual rate ÷ 12)n— total number of monthly payments (years × 12)
The formula comes from the geometric-series sum of discounted future payments. In plain English: it finds the fixed payment amount that, when collected every month and compounded at the loan rate, exactly pays off the principal by month n. If the rate is zero, the formula simplifies to PMT = P / n.
Worked Example — Derek's $25,000 Personal Loan
Loan Types — Typical Rates and Terms (2026)
Different loan types have very different rate ranges, typical terms, and collateral requirements. The table below summarizes US averages for common consumer loans; your actual offer depends on credit, income, and lender policy.
| Loan type | Typical APR | Typical term | Secured? | Notes |
|---|---|---|---|---|
| Personal loan (unsecured) | 8–36% | 2–7 yrs | No | Debt consolidation, medical, weddings. Fastest to fund. |
| New auto loan | 6–10% | 3–7 yrs | Yes (vehicle) | Rate depends on credit and term; 72-month loans are common but cost more total interest. |
| Used auto loan | 7–13% | 2–6 yrs | Yes (vehicle) | Higher rates than new-car loans; avoid stretching past 60 months. |
| Federal student (undergrad) | 6.53% | 10–25 yrs | No | 2025–2026 Direct Subsidized/Unsubsidized rate. Fixed by Congress each academic year. |
| Federal student (grad PLUS) | 9.08% | 10–25 yrs | No | Plus a 4.228% origination fee. No prepayment penalty. |
| Private student loan | 5–15% | 5–20 yrs | No | Cosigner typically required. Credit-based pricing. |
| Home equity loan | 7–10% | 5–30 yrs | Yes (home) | Fixed-rate second lien. Tax-deductible interest if used for home improvement. |
| Payday / title loan | 200–400%+ | 2 weeks | Varies | Avoid — the CFPB and most states consider these predatory. |
Sources: Federal Reserve G.19 Consumer Credit release; studentaid.gov (federal interest rates); Experian State of Credit 2025; CFPB small-dollar lending research. Last verified 2026-04-14.
The Five C's of Credit
When lenders evaluate your application, they look at five factors — the "Five C's" — that together predict how likely you are to repay. Understanding these helps you prepare a stronger application and negotiate a better rate.
Your track record of paying bills on time. Lenders pull your FICO or VantageScore, look at the length and depth of credit history, and check for late payments, collections, bankruptcies, or charge-offs. Character is the biggest single driver of the rate you are offered.
Your income relative to existing debt payments — measured by the debt-to-income (DTI) ratio. Most lenders want DTI below 43% (including the new loan payment). Steady employment history and verifiable income strengthen capacity.
Assets, savings, and down payment. Having liquid reserves reduces the lender's risk because you have a cushion if income drops. On auto and home loans, a bigger down payment reduces the loan-to-value ratio and lowers the rate you pay.
Property the lender can seize if you default. Mortgages are backed by the home, auto loans by the car. Unsecured loans (personal, credit card, federal student) have no collateral and therefore carry higher rates to compensate the lender for that risk.
The reason for the loan, the amount, the term, and the broader economic environment. Lenders assess loan purpose (debt consolidation vs wedding vs business), prevailing interest rates, unemployment trends, and industry-specific risk. You cannot change the macro environment, but you can pick loan purposes lenders view favorably.
APR vs. Interest Rate vs. APY
These three rates get confused constantly — but each means something specific.
A $15,000 personal loan at a 10% interest rate with a $300 origination fee (2%) over 3 years has a monthly payment of about $484 and an effective APR of roughly 10.84%. The 0.84-point gap is the fee baked into the rate — always compare APR, not the headline rate.
Secured vs. Unsecured Loans
| Feature | Secured | Unsecured |
|---|---|---|
| Collateral | Yes (house, car, deposit) | None |
| Examples | Mortgage, auto, HELOC, title loan | Personal, federal student, credit card |
| Typical rate | Lower (3–10%) | Higher (6–36%) |
| Approval ease | Easier with collateral | Credit-score driven |
| Risk to borrower | Collateral can be seized | Collections and credit damage |
| Best for | Large purchases, long terms | Short-term, no-collateral needs |
How to Use This Calculator
- Pick a loan type — personal, auto, or student — to match defaults to your situation.
- Enter the loan amount you plan to borrow (the principal).
- Enter the annual interest rate from your quote, or use a typical rate from the table above to estimate.
- Set the term in years. Shorter = higher monthly but much less total interest.
- Review the monthly payment, total paid, and total interest on the right.
- Open the amortization schedule to see year-by-year how interest and principal split change over time.
- Try shorter terms and different rates to see how sensitive the total cost is — this is the fastest way to understand a loan offer.
Methodology & Assumptions
- Uses the standard fixed-rate amortization formula with monthly compounding.
- Assumes a constant rate for the full term — variable and adjustable-rate loans are not modeled.
- Does not include origination fees, late fees, or insurance — add origination fees to the loan amount if you want APR-style totals.
- Assumes payments are made on time and in full every month.
- All math runs in your browser; no data leaves your device.
Glossary
- Principal
- The original amount borrowed, before interest or fees. Each payment reduces principal and accrues interest on the remaining balance.
- Interest rate
- The annual cost of borrowing the principal, not including fees.
- APR (Annual Percentage Rate)
- The interest rate plus origination fees and other required charges. The standard comparison metric under TILA / Regulation Z.
- APY (Annual Percentage Yield)
- A compounded annual rate used for deposit accounts (not loans). Includes the effect of intra-year compounding.
- Amortization
- The process of paying down a loan through fixed periodic payments, each split between interest and principal.
- Origination fee
- An upfront charge from the lender for processing the loan, typically 1–8% of the amount. Counts toward APR.
- Secured loan
- A loan backed by collateral the lender can seize if you default (mortgage, auto, HELOC).
- Unsecured loan
- A loan with no collateral, relying on the borrower's credit and income (personal loans, federal student loans, credit cards).
- Balloon payment
- A large lump sum due at the end of a loan after a period of smaller monthly payments. Common in some commercial and specialty consumer loans.
- Debt-to-income ratio (DTI)
- Total monthly debt payments divided by gross monthly income. Most lenders want under 43% including the new loan.
Frequently Asked Questions
Fixed-rate loans use PMT = P × r(1+r)^n / ((1+r)^n − 1), where P is the principal, r is the monthly rate (annual ÷ 12), and n is the number of monthly payments. A $25,000 loan at 8% APR over 5 years produces a monthly payment of about $507 and ~$5,435 in total interest.
Interest rate is the cost of borrowing the principal alone. APR adds origination fees and finance charges, expressed as an annual rate — the standard comparison metric under TILA Regulation Z. A $15,000 loan at 10% with a $300 origination fee has an APR of about 10.84%.
Character (credit history), Capacity (income vs existing debt), Capital (savings and down payment), Collateral (assets backing the loan), and Conditions (loan purpose and economic environment). All five feed into approval and the rate you are offered.
Secured loans are backed by collateral (mortgage = house, auto = car) and carry lower rates. Unsecured loans (personal, federal student, credit card) have no collateral and cost more because the lender bears more risk.
Most lenders require at least 580–600 FICO for approval. The best rates (7–10% APR in 2026) go to scores 740+. Fair credit (580–669) pays 18–25%; subprime borrowers may see 25–36% or be declined. US average FICO is about 717 (Experian 2025).
About $5,435 in total interest, with a $507 monthly payment. At 12% APR for the same term, interest jumps to ~$8,367 and the payment to $556. Stretching the term to 7 years at 8% drops the monthly to $390 but raises total interest to ~$7,756.
Most US personal, auto, and federal student loans have no prepayment penalty, and paying early saves interest. Some older mortgages, subprime auto loans, and private student loans do — check your agreement. Federal student loans are penalty-free by law.
Per Fed G.19, the average 24-month personal loan rate is around 12%. Excellent credit (740+) gets 7–10%; good credit (670–739) 10–15%; fair credit (580–669) 18–25%; subprime 25–36%.
Shortest term you can comfortably afford. $25,000 at 8% costs $5,435 interest over 5 years, $7,756 over 7 years, or $11,161 over 10 years — twice the term, roughly double the interest.
A large lump-sum payment due at the end of a loan after smaller monthlies (often interest-only). Used in some commercial real estate and specialty auto loans. Risky: you must refinance or have the cash on maturity day.