Loan Calculator

A loan calculator computes the monthly payment, total interest, and overall cost of a fixed-rate amortizing loan. Enter the loan amount, annual rate, and term in years, the calculator returns the standard monthly payment plus the lifetime interest you'll pay.

Useful for personal loans, auto loans, student loans, and any other fixed-payment debt. Mortgage-specific math (with property taxes, insurance, and PMI) is in our dedicated mortgage calculator. The math here is the pure principal-and-interest formula that underlies almost every consumer loan in the US.

Common loan types and how they compare

The standard amortization formula governs almost all consumer lending in the US, but rates and typical terms vary substantially:

• Auto loans, typically 36 to 84 months. New-car rates were 6–8% for prime borrowers as of 2025; used-car rates higher (8–12%). Common mistake: stretching to 72 or 84 months for a lower payment, which often means you owe more than the car is worth for years (negative equity).
• Personal loans, typically 12 to 84 months, unsecured. Rates vary enormously by credit profile: 8–12% for excellent credit, 20–30% for fair credit, 30%+ for subprime. Often used for debt consolidation from higher-rate credit cards.
• Student loans, federal direct loans have fixed rates set annually (around 5–8% for undergraduates and graduates). Private student loans use credit-based pricing similar to personal loans. The standard repayment term is 10 years, though many borrowers extend.
• Home equity loans, secured by your home, typical rates 7–9%, terms 5–20 years. Lower rates than unsecured personal loans; the tradeoff is that defaulting risks the house. See our home equity loan calculator for the specifics.
• Mortgages, the longest-term and largest consumer loans, typically 15 or 30 years, with rates priced separately from other consumer debt. Use the dedicated mortgage calculator.

Rate vs term: which lever to pull

The two adjustable knobs on a fixed-rate loan are the rate (how much you'll pay per dollar borrowed per year) and the term (over how many months you'll repay).

Lower rate is unambiguously better, every percentage point you shave off saves money with no offsetting cost. The way to lower your rate is by improving your credit score, increasing your down payment (where applicable), or shopping multiple lenders. A 0.5%–1% reduction on a typical 5-year auto loan saves a few hundred dollars; on a 30-year mortgage, tens of thousands.

Lower term (i.e., shorter loan) is more nuanced: it raises the monthly payment but cuts total interest, often dramatically. Whether a shorter term makes sense depends on whether the higher monthly payment fits your budget and your other priorities. Stretching a loan to a longer term to "afford" it usually means trading a larger total cost for monthly relief, sometimes a worthwhile trade, sometimes a sign the loan is too big.

Refinancing as a rate reset

A refinance is structurally a new loan that pays off the old one, typically used when market rates drop or your credit profile improves. The mechanics are: take out a new loan at a lower rate, use the proceeds to pay off the existing loan, and switch to making payments against the new loan instead.

Refinancing makes sense when:

1. The new rate is meaningfully lower (typically 0.5%–1% or more).
2. You'll keep the loan long enough to recoup any closing costs.
3. The new term doesn't reset back to a longer payoff than you'd accept.

Auto and personal loans rarely have closing costs, making the cost-benefit analysis simpler than for mortgages, but your existing lender may charge a prepayment penalty that needs to be factored in. Always read the terms before refinancing. For mortgage-specific break-even math (closing costs vs. monthly savings), use the mortgage refinance calculator.

The standard amortizing-loan payment formula:

M = P × r(1+r)^n / ((1+r)^n − 1)

where:

• M = monthly payment
• P = principal (loan amount)
• r = monthly interest rate (annual rate ÷ 12, as a decimal)
• n = total number of monthly payments (years × 12)

The math compresses two ideas: each month, interest accrues on the remaining balance (balance × r), and the payment covers both the interest and a chunk of principal. The formula solves for the constant payment that brings the balance to zero exactly at month n.

Total paid = M × n. Total interest = M × n − P. The longer the term, the smaller M is, but the larger the gap between M × n and P becomes, since you're paying interest for more months on a balance that pays down more slowly.

How amortization actually works month by month

The fixed monthly payment M is split each month between interest and principal:

• Interest portion = current balance × r
• Principal portion = M − interest portion
• New balance = current balance − principal portion

The interest portion shrinks as the balance shrinks, so the principal portion grows correspondingly. The monthly payment M itself stays constant, what changes is the mix.

Take a $25,000 loan at 7.5% over 5 years as a worked example. The monthly rate is 0.075 / 12 = 0.00625, the term is 60 months, and the formula gives M ≈ $501.06. The first three months look like this:

The interest portion drops by about $2 per month and the principal portion grows by the same. By the final month of the loan, almost the entire payment is principal. This pattern is why extra principal payments early in the loan have outsized impact, they shrink the base on which all subsequent interest is computed.

APR vs. interest rate vs. APY

Three related but distinct numbers show up on loan paperwork:

• Interest rate, the cost of borrowing the principal alone, as an annualized percentage. This is the annual_rate input above.
• APR (Annual Percentage Rate), interest rate plus required fees (origination, points, mandatory insurances) expressed as an annualized rate. APR is meant to be the apples-to-apples comparison number when shopping loans. On a no-fee loan, APR equals the interest rate; on a loan with $500 in origination fees, APR is slightly higher.
• APY (Annual Percentage Yield), used on savings accounts (where it's in your favor) rather than loans. APY accounts for compounding frequency. Confusingly, savings accounts publish APY but loans publish APR, they are not the same number.

When comparing loan offers, always compare APR to APR, not interest rate to interest rate. Two loans at the same nominal rate can have very different real costs once fees are factored in.