How this personal loan calculator works

A personal loan is deceptively simple: you borrow a lump sum, then repay it in fixed instalments — usually monthly — over an agreed term. Each payment chips away at two things at once: the interest charged on what you still owe, and the principal (the amount you actually borrowed). Enter the loan amount, the annual percentage rate (APR) the lender quotes, and the term in years, and this calculator instantly shows your payment amount, the total interest you will pay over the life of the loan, and how much you pay back altogether. The balance chart shows exactly how your debt shrinks payment by payment.

Everything runs in your browser — no sign-up, nothing sent anywhere, and your last inputs are remembered for next time. It is an estimate for planning, not a loan offer: real quotes may include origination fees or slightly different day-count conventions, so always check the lender's own figures before signing.

The monthly payment formula, explained simply

Behind the fixed monthly payment sits the standard loan amortisation formula. Lenders take your annual rate, divide it into a monthly rate, and solve for the payment that clears the loan in exactly the agreed number of months, interest included:

• Monthly rate = APR ÷ 100 ÷ 12. A 9% APR means about 0.75% per month.
• Number of payments = years × 12. Five years means 60 payments.
• Payment = principal × monthly rate × (1 + monthly rate)^payments ÷ ((1 + monthly rate)^payments − 1).

The clever part is what happens inside each payment. In month one, the full monthly rate is charged on the whole loan, so most of your payment goes to interest and only a little reduces the principal. As the balance falls, the interest slice shrinks and more of each payment attacks the principal. That is why the balance chart above falls slowly at first, then drops faster near the end — the maths behind it is the same compounding you see in our compound interest calculator, running in reverse.

Worked example: a $20,000 loan at 9% APR over 5 years

Borrow $20,000 at 9% APR and repay it over 5 years (60 monthly payments):

Try it in the calculator above — you should see $415.17 per month, about $4,910 in interest, and roughly $24,910 paid back in total. Notice the headline: the loan costs you nearly 25% more than you borrowed. That interest is the real price tag of the loan, and it is the number worth comparing when you shop around — two lenders offering the same $20,000 can quote very different total interest once APR and term differ.

How your APR changes everything

The rate is the single biggest lever on a loan. Same $20,000 borrowed for 5 years:

Moving from 6% to 12% adds about $58 a month — and more than doubles the total interest, from roughly $3,199 to $6,693. This is why improving your credit score before applying can be worth real money: borrowers with excellent credit routinely qualify for rates several points lower than borrowers with fair credit, and on a five-year loan each point of APR is worth hundreds of dollars. The Consumer Financial Protection Bureau explains how personal loans work and what to compare across lenders.

Shorter term vs lower payment: the trade-off

Your term is the other lever. A longer term shrinks the monthly payment but stretches out the interest:

The 7-year term feels comfortable at $322 a month, but it costs you roughly $4,130 more in interest than the 3-year term. The honest question is not "what is the lowest payment I can get?" but "what is the shortest term I can comfortably afford?" Use the calculator to test terms against your budget: enter your numbers, then try 3, 5 and 7 years and compare the total-interest column. If a recent pay rise has given you breathing room, our pay raise calculator shows exactly how much extra take-home you have — routing even part of it into a shorter term pays off handsomely.

What is a good APR for a personal loan in 2026?

There is no single answer — your rate depends on your credit score, income, existing debts and the lender. As a rough guide for 2026:

• Excellent credit (720+): often the lowest advertised rates, roughly 7–10%.
• Good credit (670–719): commonly 10–15%.
• Fair credit (580–669): often 15–25% or more.
• Below 580: personal loans get expensive or hard to find; consider whether borrowing is truly necessary.

Rates move with the economy, so treat these as a compass, not a quote. The Federal Reserve publishes average consumer credit rates in its G.19 statistical release, which is the most authoritative benchmark available. And remember that APR is the figure to compare — it rolls the interest rate and most fees into one number, so a loan with a low rate but a big origination fee cannot hide.

Extra payments and paying off early

Most personal loans let you pay extra or settle early without a penalty — but always confirm, because some lenders still charge prepayment fees. Because interest is charged on the outstanding balance each period, any extra payment goes straight to the principal, and from that moment you are paying interest on a smaller number. An extra $100 a month on the $20,000, 9%, 5-year example above cuts the loan short by about 13 months and saves roughly $1,180 in interest. If you are torn between attacking debt and building savings, run both tools: this page shows what debt costs you, and our retirement savings calculator shows what those same dollars could grow into — the comparison usually makes the decision obvious.