Calculate your monthly loan payment, total interest, and total cost for any fixed-rate loan.
Frequently Asked Questions
How is a monthly loan payment calculated?
Using the amortization formula M = P x r x (1+r)^n / ((1+r)^n - 1), where P is the loan amount, r is the monthly interest rate, and n is the number of monthly payments.
What is the difference between total interest and total paid?
Total paid is every payment added together over the life of the loan. Total interest is total paid minus the original loan amount — the extra cost of borrowing.
Does a lower interest rate always mean a lower payment?
Yes, for the same loan amount and term, a lower rate always reduces both the monthly payment and total interest paid.
How loan payments are calculated
Your monthly payment is based on the standard amortization formula, which spreads the loan amount and interest evenly across every payment: M = P × r × (1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is your monthly interest rate, and n is the number of monthly payments. Each payment covers a mix of interest and principal, with the interest portion shrinking over time.
How to use this loan calculator
- Enter the amount you plan to borrow.
- Enter the annual interest rate offered by your lender.
- Enter the loan term in years.
- Click Calculate to see your monthly payment, total interest, and total cost.
Example: A $20,000 loan at 6.5% over 5 years costs $391.32 a month, for $3,479.38 in total interest.
Types of loans in 2026
Most consumer loans fall into two broad categories. Secured loans require collateral — an asset like a car or home that the lender can seize if you default — and typically come with lower interest rates because the lender’s risk is reduced. Unsecured loans, like most personal loans and credit cards, require no collateral, but lenders compensate for the higher risk with higher rates and stricter approval criteria based on your credit history.
Common reasons people take out a loan include consolidating higher-interest debt into a single lower-rate payment, covering a major purchase or home improvement project, funding a wedding or medical expense, or bridging a cash flow gap for a small business.
Factors that affect your loan rate
- Credit score: Higher scores unlock significantly lower rates — often several percentage points of difference between excellent and fair credit.
- Loan term: Shorter terms usually carry lower rates but higher monthly payments; longer terms lower the payment but increase total interest paid.
- Loan amount: Very small or very large loans can sometimes carry different rate tiers depending on the lender.
- Debt-to-income ratio: Lenders weigh how much of your income is already committed to other debts.
Tips for getting a better loan
Shop multiple lenders before committing — rates for the same borrower can vary by more than a full percentage point between institutions. Check your credit report for errors before applying, since even small inaccuracies can push you into a worse rate tier. If you can afford it, a shorter term or extra principal payments (see our debt payoff calculator) can save substantially on total interest.
Expert insight: when to bring in a professional
The CFP Board notes that a Certified Financial Planner can assess your full financial picture — income, existing debt, credit report, and goals — before recommending whether a personal loan, balance transfer, or debt consolidation loan fits your situation best. Financial planners quoted by Experian commonly stress checking your credit report for errors and comparing several lenders before signing, since the same borrower can be quoted meaningfully different rates depending on the lender.
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Disclaimer: This calculator is provided for general informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. Results are estimates based on the values you enter and should not be relied upon as the sole basis for any financial or other decision. Past performance and projected figures are not a guarantee of future results. Always consult a qualified professional before making financial decisions. See our Legal Notice and Privacy Policy for more information.