How to use the loan calculator
Enter how much you want to borrow, the interest rate and how long you'll take to repay. The calculator shows your fixed monthly payment, the total interest and the total amount you'll pay back. It works for personal loans, student loans, business loans and any other loan with a fixed rate and equal monthly payments.
The loan payment formula
M = P × r ÷ (1 − (1 + r)−n)
- M: monthly payment
- P: loan amount (principal)
- r: monthly interest rate = annual rate ÷ 12 ÷ 100
- n: number of monthly payments
Example
Borrowing $20,000 at 7.5% for 5 years: r = 0.075 ÷ 12 = 0.00625 and n = 60, so the payment is about $400.76 a month. Over five years you pay $24,045.54 in total, of which $4,045.54 is interest.
How to get a lower loan payment
- Improve your credit score before applying. Better credit usually means a lower rate.
- Compare several lenders. Banks, credit unions and online lenders often quote very different rates.
- Borrow less. Every dollar you don't borrow saves you its interest too.
- Choose a longer term for a lower monthly payment, but remember you'll pay more interest overall.