💳 Loan Calculator
Enter your loan amount, interest rate, and term to see your exact monthly payment and complete payment-by-payment amortization schedule.
How Loan Payments Are Calculated
Most personal and installment loans use a fixed monthly payment structure called amortization. Each payment is split between interest (charged on the remaining balance) and principal (repayment of what you borrowed). Early in the loan term, the majority of each payment goes toward interest. As the balance decreases, more of each payment shifts toward principal. This is why paying a little extra each month — especially early in a loan — can dramatically reduce total interest paid and shorten the repayment period.
APR vs. Interest Rate
The stated interest rate and the Annual Percentage Rate (APR) are often different numbers. The interest rate is the cost of borrowing the principal. The APR includes the interest rate plus any fees — origination fees, underwriting fees, mortgage points — expressed as an annual rate. The APR gives a more complete picture of the true cost of a loan, and lenders in the US are legally required to disclose it. When comparing loan offers, always compare APRs, not just interest rates.
The Real Cost of Loan Term Length
A longer loan term means lower monthly payments but significantly more total interest paid. For example, a $20,000 loan at 7% over 3 years costs roughly $1,960 in total interest. The same loan over 5 years costs about $3,296 — 68% more interest for the convenience of a lower monthly payment. Understanding this trade-off helps you choose the term that genuinely fits your financial situation rather than simply minimizing the monthly amount.