How to use this loan calculator
- Pick the loan type. Personal loans, auto loans and other fixed-rate installment loans are amortized: you repay them with equal payments. Choose Deferred payment if everything is repaid in one lump sum at the end, or Bond if a fixed amount is due at maturity and you want to know what it is worth today.
- Enter the amount, term and interest rate. The default rate of 11.86% is the Federal Reserve’s average rate on 24-month personal loans at commercial banks (May 2026 survey). For the most accurate result, use the rate from your loan offer.
- Adjust payment frequency and compounding if needed. Leave both at monthly for a typical loan quote, or switch to biweekly, weekly or another schedule.
- Review the results: the payment, total interest, a balance chart and the amortization schedule. Copy the link to save or share your scenario.
Loan payment formula
A fixed-rate loan with equal payments uses the standard amortization formula:
M = P × r(1 + r)^n / ((1 + r)^n − 1)
- M
- payment per period
- P
- amount borrowed (principal)
- r
- interest rate per payment period = annual rate ÷ payments per year
- n
- total number of payments = years × payments per year
Worked example
Borrow P = $20,000 at 11.86% for 5 years with monthly payments. The monthly rate is r = 11.86% ÷ 12 = 0.009883 and there are n = 60 payments. Then (1 + r)n = 1.8041, so M = $20,000 × 0.009883 × 1.8041 ÷ (1.8041 − 1) = $443.48 a month. Over 60 payments you repay $26,608.52: the $20,000 you borrowed plus $6,608.52 of interest.
How loan amortization works
Each payment is split in two. First, the lender charges interest on the balance you still owe (balance × monthly rate). The rest of the payment reduces the balance. Because the balance shrinks every month, the interest share falls and the principal share grows, even though the payment never changes.
In the example, the first $443.48 payment is $197.67 of interest and $245.81 of principal. The final payment is just $4.34 of interest. The balance does not fall below half of the original $20,000 until payment #35, by which point you have paid $5,302 in interest, or 80% of all the interest on the loan. That front-loading is why extra payments early in a loan save the most. The schedule in the calculator shows the split for every payment. To see how extra payments shorten a loan, try the amortization calculator.
Monthly payments on personal loans by amount and term
Monthly payment at 11.86% interest with no fees. Multiply by the number of months to get the total you would repay.
| Loan amount | 2 years | 3 years | 4 years | 5 years | 7 years |
|---|---|---|---|---|---|
| $5,000 | $235.04 | $165.74 | $131.33 | $110.87 | $87.89 |
| $10,000 | $470.08 | $331.47 | $262.65 | $221.74 | $175.78 |
| $15,000 | $705.12 | $497.21 | $393.98 | $332.61 | $263.67 |
| $20,000 | $940.16 | $662.95 | $525.30 | $443.48 | $351.56 |
| $30,000 | $1,410.24 | $994.42 | $787.95 | $665.21 | $527.34 |
| $50,000 | $2,350.41 | $1,657.37 | $1,313.26 | $1,108.69 | $878.90 |
How the loan term changes total interest
A longer term lowers the payment but keeps the balance around longer, so more interest builds up. For the same $20,000 at 11.86%, a 7-year loan costs $5,665 more in interest than a 3-year loan, even though its payment is $311.39 a month lower.
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 2 years | $940.16 | $2,564 | $22,564 |
| 3 years | $662.95 | $3,866 | $23,866 |
| 4 years | $525.30 | $5,215 | $25,215 |
| 5 years | $443.48 | $6,609 | $26,609 |
| 6 years | $389.55 | $8,048 | $28,048 |
| 7 years | $351.56 | $9,531 | $29,531 |
APR vs. interest rate: what’s the difference?
The interest rate is what the lender charges on your balance. The annual percentage rate (APR) is the cost of credit as a yearly rate: the interest rate plus finance charges such as origination fees, according to the Consumer Financial Protection Bureau. Under the Truth in Lending Act’s Regulation Z, lenders must disclose the APR, the finance charge (the dollar cost of the credit) and the total of payments, which makes the APR the fairest way to compare offers.
If a loan has no fees, its APR generally equals its interest rate and this calculator’s payment should closely match the lender’s. If fees are deducted from the loan, enter the full amount you owe; your APR will be higher than the rate you enter. Also note that an APR is a nominal rate: the rate per payment period times the number of periods in a year. With monthly compounding, 11.86% works out to an effective annual rate of 12.53%, which the calculator shows as a stat.
Secured vs. unsecured loans
A secured loan is backed by collateral, such as a car or a home, that the lender can take to get its money back if you do not repay. Auto loans and mortgages are the most familiar examples. An unsecured loan has no collateral, so the lender relies on your credit history. Credit cards, student loans and many personal loans are unsecured. Because unsecured loans put the lender at more risk, they may carry higher interest rates. If you fall behind, the lender can report late payments, send the debt to collections or sue.
How to get a lower interest rate on a loan
- Check and improve your credit first. Generally, the higher your credit score, the lower your rate. Paying down card balances and fixing report errors before you apply can help. Our debt-to-income calculator shows how lenders see your existing debt.
- Compare at least three offers by APR, including banks, online lenders and credit unions. Federal credit unions generally can’t charge more than 18% under a temporary NCUA ceiling that runs through September 10, 2027.
- Consider a secured loan if you have savings or a vehicle to pledge, keeping in mind that you could lose the collateral.
- Choose the shortest term you can afford. Even at the same rate, a shorter term saves interest, as the table above shows.
Rates matter a lot. On a $20,000, 5-year loan, a 9% rate costs $4,910 in interest while 18% costs $10,472:
| Interest rate | Monthly payment | Total interest |
|---|---|---|
| 6% | $386.66 | $3,199 |
| 9% | $415.17 | $4,910 |
| 12% | $444.89 | $6,693 |
| 15% | $475.80 | $8,548 |
| 18% | $507.87 | $10,472 |
| 24% | $575.36 | $14,522 |
| 30% | $647.07 | $18,824 |
| 36% | $722.66 | $23,360 |
Simple interest vs. amortized loans
Auto loans most often charge simple interest (the CFPB calls it far more common than the alternative): interest is calculated daily or monthly on the balance you actually owe, which is how an amortization schedule works. Pay extra and you owe less interest. The alternative, precomputed interest, adds the full interest charge to the loan up front, so paying it off early saves less. Ask which method a lender uses before you sign.
“Simple interest” also describes interest that is never added to the balance. On a loan repaid in one lump sum, simple interest on $20,000 at 11.86% for 5 years is P × r × t = $11,860.00. If that interest compounds monthly instead, it grows to $16,082.97, which is what the calculator’s deferred payment option shows. For more on simple and compound interest, see the interest calculator and the compound interest calculator.
Deferred payment loans and bonds
A deferred payment loan has no payments until it matures, when the principal and all the interest are due at once. The bond option works in reverse, like a zero-coupon bond: the amount due at maturity (the face value) is fixed, and the borrower receives less than that today. U.S. Treasury bills work this way; they are sold at a discount or at par, and the interest is the difference between the purchase price and the face value paid at maturity. The calculator handles both cases with the same compound-growth formula:
F = P × (1 + r/m)^(m × t) and P = F ÷ (1 + r/m)^(m × t)
- F
- amount due at maturity
- P
- amount borrowed or received today
- r
- annual interest rate (decimal)
- m
- compounding periods per year (with continuous compounding, the factor is e^(r × t))
- t
- term in years
With the default inputs, a $20,000 deferred loan grows by a factor of 1.8041 to $36,082.97 after 5 years. A bond promising $20,000 in 5 years at the same rate is worth $11,085.56 today. See the payment calculator to solve for a term or payment instead, the interest rate calculator to find the rate on an offer, or the auto loan calculator for car-specific costs like sales tax and trade-ins.
Frequently asked questions
How do you calculate a loan payment?
Use the amortization formula M = P × r(1 + r)n ÷ [(1 + r)n − 1], where P is the amount borrowed, r is the interest rate per payment (the annual rate ÷ 12 for monthly payments) and n is the number of payments. For $20,000 at 11.86% over 5 years, r = 0.009883 and n = 60, so the payment is $443.48 a month.
What is the monthly payment on a $10,000 loan?
At 11.86% interest, a $10,000 loan costs $331.47 a month over 3 years or $221.74 a month over 5 years. The 3-year loan costs $1,933 in total interest and the 5-year loan $3,304. Your own rate depends mostly on your credit, so enter the rate from your loan offer.
Is a shorter or longer loan term better?
A shorter term costs less overall; a longer term costs less each month. Borrowing $20,000 at 11.86% over 3 years means payments of $662.95 and $3,866 in interest. Stretching it to 7 years drops the payment to $351.56 but raises interest to $9,531. Pick the shortest term whose payment fits comfortably in your budget.
What is the difference between APR and interest rate?
The interest rate is what the lender charges on the balance; the APR is the yearly cost of credit, including the interest rate plus fees such as origination charges. Federal law requires lenders to disclose the APR, so it is the best number for comparing offers. If a loan has no fees, its APR and interest rate are generally the same. Compare APR to APR, not APR to interest rate.
Does paying off a loan early save interest?
Yes, on a simple-interest loan (the most common kind of auto loan), because interest is charged only on the balance you still owe, so extra principal payments cut future interest. Loans with precomputed interest save less, because the interest is set up front. Your Truth in Lending disclosure must say whether a prepayment penalty may apply (or, for precomputed interest, whether you get a rebate), so check it before paying ahead.
What is a deferred payment loan?
A deferred payment loan requires no payments until it matures; then you repay the principal and all accrued interest in one lump sum. Because nothing is paid down, interest compounds on the full balance the whole time. Borrowing $20,000 for 5 years at 11.86% compounded monthly means repaying $36,082.97, including $16,082.97 of interest. With monthly payments, the same loan costs $6,608.52 in interest.
What does the bond option calculate?
The bond option tells you how much money a set amount due in the future is worth today, which is what you would receive for a zero-coupon bond or a discount note. For $20,000 due in 5 years at 11.86% compounded monthly, you receive $11,085.56 today. The difference, $8,914.44, is the interest.