Loan Calculator

Every fixed-rate amortizing loan uses the same formula: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]. P is the amount borrowed, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (years × 12). The payment M stays the same every month, but the split between interest and principal shifts dramatically over time. That fixed payment is what makes budgeting predictable, but it can also disguise how slowly you actually build equity in the early years.

On a $20,000 loan at 8.5% for 5 years, the monthly payment is about $410. In month one, roughly $142 of that goes to interest and only $268 to principal. By month sixty, almost the entire payment is principal. This front-loading of interest is the single most important fact about amortization — it explains why early extra payments save so much, why selling or refinancing in the first few years recoups very little equity, and why a loan that looks cheap on a monthly basis can still cost thousands more than a shorter-term alternative.

Loans that quote APR rather than a nominal interest rate already bake in origination fees, discount points, and other mandatory lender charges, so an 8.5% interest rate with a 1% origination fee can carry an APR closer to 8.9%. Always compare APR to APR when shopping offers, and remember that APR assumes you hold the loan to term — if you plan to pay it off early, the effective cost of upfront fees is actually higher than APR suggests.

Suppose you finance a used SUV for $25,000 over 60 months at 7.5% APR with no down payment. Plugging into the formula gives a monthly payment of about $501, total payments of about $30,073, and total interest paid of about $5,073. Over five years you'll have paid roughly 20% more than the sticker price for the privilege of borrowing the money — a useful gut-check before signing.

Stretching the same loan to 72 months drops the monthly payment to about $432 — but total interest rises to about $6,115. You save $69 a month and pay $1,042 more for the privilege. Push it to 84 months and the payment falls to around $384 while interest balloons past $7,200. This is the classic tradeoff: a longer term lowers the payment, but every extra month is another month the lender earns interest on principal you still owe, and on a depreciating asset like a car you can easily end up underwater (owing more than the vehicle is worth).

Adding a single extra $100 payment per month to the original 60-month loan pays it off about 11 months early and saves roughly $1,000 in interest. A one-time $2,000 lump-sum payment in month six saves a comparable amount. Extra payments work best in the first half of the term, when most of each scheduled payment is still interest — by the final year, accelerating payoff barely moves the needle because there's almost no interest left to save.

Personal loans are usually unsecured, 2–7 year terms, and price by credit score. Excellent credit (740+) sees rates near the lower end of the market; sub-650 credit can pay double, sometimes more. Use them for debt consolidation only when the new rate is meaningfully below the blended rate on what you're paying off, and beware origination fees that quietly raise the effective cost — a 5% origination on a $15,000 loan is $750 you don't get to spend.

Auto loans are secured by the vehicle, which is why rates are lower than personal loans but the lender can repossess if you default. Manufacturer-subsidized rates (0–3% APR) are real, but usually only available on a narrow list of models, require excellent credit, and often force you to choose between the low rate and a cash rebate — run the math both ways before committing.

Federal student loans use the same amortization math but offer income-driven repayment plans, deferment, and forgiveness programs that this calculator does not model. If you have federal loans, compare standard amortization to IDR before paying extra, because aggressive payoff can cost you forgiveness eligibility. Private student loans behave like ordinary personal loans and rarely offer the same flexibility.

Small-business term loans behave like personal loans on the math side, but underwriting weights cash flow, time-in-business, and personal guarantees more than personal credit alone. SBA 7(a) loans cap rates at prime plus a regulated spread and stretch terms to 10–25 years, which is why they're often the cheapest option for established businesses even though paperwork takes longer.

Comparing monthly payments instead of total cost. A lower payment on a longer term almost always costs more in total interest — sometimes thousands more for what looks like a $40-a-month saving.

Ignoring origination fees. A 1–6% origination fee is deducted from the disbursed amount but you still owe the full principal — that effectively raises your real cost of borrowing well above the quoted rate, especially if you pay the loan off early.

Buying a payment, not a price. Dealers and lenders sometimes negotiate the monthly payment first and then quietly adjust the term, the rate, or add-ons (gap insurance, extended warranties, service contracts) to hit it. Always negotiate price and rate independently, and review the final paperwork line by line.

Skipping the amortization schedule. The month-by-month table below shows exactly how much of each payment is interest vs principal, how fast your balance actually drops, and where extra payments would have the biggest impact — review it before signing anything material.