Loan Calculator
Calculate your monthly loan payment, total interest, and view a full amortization schedule. See how extra payments save you money.
Reference table
| Loan Amount | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 1,000 | $19.57 | $174.00 | $1,174 |
| 2,000 | $39.13 | $348.00 | $2,348 |
| 2,500 | $48.92 | $435.00 | $2,935 |
| 5,000 | $97.83 | $870.00 | $5,870 |
| 7,500 | $146.75 | $1,305 | $8,805 |
| 10,000 | $195.66 | $1,740 | $11,740 |
| 12,500 | $244.58 | $2,175 | $14,675 |
| 15,000 | $293.49 | $2,610 | $17,610 |
| 20,000 | $391.32 | $3,479 | $23,479 |
| 25,000 | $489.15 | $4,349 | $29,349 |
| 30,000 | $586.98 | $5,219 | $35,219 |
| 40,000 | $782.65 | $6,959 | $46,959 |
| 50,000 | $978.31 | $8,698 | $58,698 |
| 75,000 | $1,467 | $13,048 | $88,048 |
| 100,000 | $1,957 | $17,397 | $117,397 |
Key Facts
- A shorter term means less total interest but higher monthly payments. A 15-year loan typically costs 40-60% less in interest than a 30-year loan.
- Your credit score directly impacts your interest rate. A score above 740 can save thousands over the life of the loan compared to below 670.
- Secured loans (backed by collateral like a car or home) generally offer lower rates than unsecured personal loans by 2-5 percentage points.
- Even small extra payments can dramatically reduce total interest. An extra $50/month on a $25,000 loan can save over $1,500 in interest.
Save Money on Your Loan
- Improve your credit score before applying — even 20 points can lower your rate by 0.25-0.5%
- Compare offers from at least 3 lenders — rates can vary by 2-3% for the same borrower
- Make extra payments toward principal whenever possible — every dollar goes directly to reducing your balance
- Watch for origination fees and prepayment penalties — they can add 1-6% to the true cost of borrowing
How Loan Payments Are Calculated
Understanding Amortization and Interest
Factors That Affect Your Loan Cost
- Credit score — The single biggest factor in your interest rate. Excellent credit (740+) can get rates 2-4% lower than fair credit (580-669), potentially saving tens of thousands over the loan term.
- Loan term — Shorter terms mean higher monthly payments but dramatically less total interest. A 15-year loan vs. 30-year loan at the same rate can cut total interest by more than half.
- Secured vs. unsecured — Secured loans (auto, mortgage) use collateral, allowing lower rates (3-8%). Unsecured personal loans carry higher rates (6-36%) because the lender takes more risk.
- Prepayment penalties — Some lenders charge fees for paying off early. Always check before signing. Federal student loans and most mortgages originated after 2014 cannot have prepayment penalties.
- Origination fees — Upfront fees of 1-8% that increase your effective APR. A $10,000 loan with a 5% origination fee means you only receive $9,500 but repay the full $10,000 plus interest.
- APR vs. interest rate — APR includes fees and gives the true cost of borrowing. Always compare APRs, not just interest rates, when shopping for loans.
Common Types of Loans
- Personal loans — Unsecured, fixed-rate loans for almost any purpose. Typical rates: 6-36% APR. Terms: 1-7 years. Best for debt consolidation, home improvements, or major purchases.
- Auto loans — Secured by the vehicle. Typical rates: 4-12% APR. Terms: 2-7 years. New cars generally get better rates than used cars. Experts recommend terms no longer than 60 months.
- Mortgage loans — Secured by the home. Typical rates: 5-8% APR. Terms: 15 or 30 years. The largest loan most people will ever take. Interest may be tax-deductible.
- Student loans — Federal loans offer fixed rates set by Congress (currently ~5-7%). Private student loans vary by creditworthiness. Income-driven repayment plans are available for federal loans.
- Business loans — SBA loans offer rates from 5-10%. Traditional bank loans: 6-13%. Online lenders: 7-30%+. Terms vary widely from 1-25 years depending on the loan type and purpose.
- Home equity loans — Secured by home equity. Typical rates: 7-12% APR. Can borrow up to 80-85% of equity. Interest may be tax-deductible if used for home improvements.
Step-by-Step Loan Calculations
Two real-world examples showing how loan terms affect total cost
Car Loan: $25,000 at 6.5% for 5 years
- Principal (P) = $25,000
- Monthly rate (r) = 6.5% ÷ 12 = 0.5417%
- Number of payments (n) = 5 × 12 = 60
- M = $25,000 × [0.005417 × (1.005417)^60] / [(1.005417)^60 – 1]
- M = $25,000 × [0.005417 × 1.3829] / [1.3829 – 1]
- M = $25,000 × 0.007492 / 0.3829
- Monthly Payment = $489.15
- Total Paid = $489.15 × 60 = $29,349
- Total Interest = $29,349 – $25,000 = $4,349
Monthly payment: $489.15 | Total interest: $4,349 | True cost: 1.17× the loan amount
Student Loan: $35,000 at 5.5% for 10 years
- Principal (P) = $35,000
- Monthly rate (r) = 5.5% ÷ 12 = 0.4583%
- Number of payments (n) = 10 × 12 = 120
- M = $35,000 × [0.004583 × (1.004583)^120] / [(1.004583)^120 – 1]
- M = $35,000 × [0.004583 × 1.7289] / [1.7289 – 1]
- M = $35,000 × 0.007924 / 0.7289
- Monthly Payment = $380.03
- Total Paid = $380.03 × 120 = $45,604
- Total Interest = $45,604 – $35,000 = $10,604
Monthly payment: $380.03 | Total interest: $10,604 | True cost: 1.30× the loan amount
Frequently Asked Questions
What is the difference between APR and interest rate?
Interest rate is the base cost of borrowing money, expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate plus additional fees like origination fees, closing costs, and discount points. APR gives you the true total cost of borrowing and is the best way to compare loan offers from different lenders. For example, a loan with a 5% interest rate and a 2% origination fee has an APR higher than 5%. Federal law requires lenders to disclose the APR before you sign any loan agreement.
How does my credit score affect my loan interest rate?
Your credit score is the primary factor lenders use to set your interest rate. Borrowers with excellent credit (740-850) typically receive rates 2-4% lower than those with fair credit (580-669). On a $25,000 5-year loan, the difference between a 6% rate and a 12% rate is approximately $4,500 in extra interest. To improve your rate: pay bills on time, reduce credit card balances below 30% of limits, avoid opening new accounts before applying, and check your credit report for errors at AnnualCreditReport.com.
Should I choose a shorter or longer loan term?
It depends on your financial priorities. A shorter term (e.g., 3 years vs. 7 years) means higher monthly payments but significantly less total interest — often 50-70% less. A longer term keeps monthly payments affordable but costs more over time. The best approach for many borrowers is to take the longer term for flexibility but make extra payments when possible. This gives you the safety net of lower required payments while still reducing interest if you can afford to pay more. Use this calculator to compare different terms and see the exact savings.
What is amortization and how does it work?
Amortization is the process of paying off a loan through scheduled, equal payments over time. Each payment includes two parts: interest (the lender's fee for borrowing) and principal (reducing what you owe). In the early payments, most goes to interest. Over time, as the balance decreases, more of each payment goes toward the principal. This is why paying extra early in the loan term has the biggest impact — you reduce the balance that interest is calculated on, creating a compounding savings effect throughout the remaining term.
Can I pay off my loan early without penalty?
Most modern loans allow early payoff without penalties. Federal student loans, most auto loans, and mortgages originated after January 2014 (under the Ability-to-Repay rule) cannot charge prepayment penalties. However, some personal loans and older mortgages may include them. Always check your loan agreement for a prepayment penalty clause before signing. If your loan has no penalty, making extra payments is one of the best financial moves you can make — even an extra $50-100 per month can save thousands in interest and shave years off your payoff date.
How much can I save by making extra payments on my loan?
Extra payments go directly toward reducing your principal balance, which lowers the interest calculated on all future payments. The savings depend on your loan size, rate, and term. For example, adding $100/month extra to a $25,000 loan at 7% for 5 years saves approximately $800 in interest and pays off the loan 10 months early. On a larger loan like a $200,000 mortgage at 6% for 30 years, an extra $200/month saves over $65,000 in interest and cuts nearly 7 years off the term. Use the extra payment field in this calculator to see your exact savings.