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Loan Calculator

Calculate monthly loan payments, total interest, and payment schedule for personal loans, auto loans, or any fixed-rate loan.

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How Loan Payments Work

Fixed-rate loans use amortization: each monthly payment is identical, but the split between interest and principal shifts over time. Early payments are mostly interest; later payments are mostly principal.

Loan Payment Formula

PMT = P × [r(1+r)^n] / [(1+r)^n - 1]

  • PMT: Monthly payment
  • P: Principal (loan amount)
  • r: Monthly interest rate (annual rate ÷ 12)
  • n: Total number of payments (years × 12)

Example: $10,000 Loan at 8% for 5 Years

  • Monthly payment: $202.76
  • Total payments: $12,166
  • Total interest: $2,166
  • First payment: $67 to interest, $136 to principal
  • Last payment: $1.35 to interest, $201 to principal

How Loan Term Affects Cost

On a $25,000 loan at 7%:

  • 3-year term: $772/mo payment, $2,777 total interest
  • 5-year term: $495/mo payment, $4,700 total interest
  • 7-year term: $379/mo payment, $6,809 total interest

The longer the term, the lower the monthly payment — but you pay significantly more in total interest. A 7-year term costs nearly 2.5× more interest than a 3-year term.

Types of Loans

  • Personal loans: Unsecured, fixed rate, 2-7 year terms. Rates depend heavily on credit score (6-36% APR)
  • Auto loans: Secured by the vehicle. Lower rates than personal loans (4-12%). Longer terms (72-84 months) can lead to being "underwater"
  • Home equity loans: Secured by your home. Lowest rates but risk of foreclosure. Interest may be tax-deductible

Tips for Better Loan Terms

  • Check your credit score first: Scores above 740 qualify for the best rates. Each 50-point drop can add 1-4% to your rate
  • Get pre-qualified with multiple lenders: Rate shopping within a 14-day window counts as a single credit inquiry
  • Consider secured loans: Collateral (car, savings account) often means 2-5% lower rates
  • Choose the shortest affordable term: Lower total cost even though monthly payments are higher
  • Make extra principal payments: Even $50/month extra on a $20,000 loan at 8% saves $1,600 in interest and pays off 14 months early
  • Set up autopay: Many lenders offer 0.25-0.50% rate discount for automatic payments

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Frequently Asked Questions

How is loan payment calculated?

Monthly payment = P × [r(1+r)^n] / [(1+r)^n - 1], where P is principal, r is monthly rate, n is number of payments.

What affects my loan rate?

Credit score, loan amount, loan term, collateral, and current market rates all influence your interest rate.

Should I get a shorter or longer loan term?

Shorter terms have higher payments but lower total interest. Longer terms have lower payments but higher total cost.

Can I pay off a loan early?

Usually yes, but check for prepayment penalties. Paying extra toward principal reduces total interest paid.