Loan Calculator
Monthly payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where r is the monthly rate and n the number of payments, so a $20,000 loan at 12% APR for 5 years costs $444.89 a month and $6,693.34 in total interest. You can also switch to biweekly or weekly payments and see the payoff date.
By the Calculators With Steps team · Updated November 10, 2026 · How we check our math
- Total interest
- $6,693.3433.5% of the amount borrowed
- Total of payments
- $26,693.34
- Number of payments
- 60one every month
- Loan term
- 5 years
- Payoff date
- November 10, 2031
- Principal$20,000.00
- Interest$6,693.34
- Principal
- Interest
Step-by-step working
- Periodic rate r = 12% ÷ 12 = 0.01
- Number of payments n = 5 years × 12 = 60
- Payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
- (1 + r)^n = (1 + 0.01)^60 = 1.816697
- Payment = $20,000.00 × 0.01 × 1.816697 ÷ (1.816697 − 1) = $444.89
- Total interest = $26,693.34 paid − $20,000.00 borrowed = $6,693.34
Show yearly amortization schedule
| Year | Principal paid | Interest paid | Balance at year end |
|---|---|---|---|
| 1 | $3,105.80 | $2,232.86 | $16,894.20 |
| 2 | $3,499.70 | $1,838.97 | $13,394.50 |
| 3 | $3,943.55 | $1,395.12 | $9,450.95 |
| 4 | $4,443.69 | $894.98 | $5,007.26 |
| 5 | $5,007.26 | $331.41 | $0.00 |
Assumes a fixed rate and equal payments. Origination fees, insurance and late charges are not included.
How to use the loan calculator
- Loan amount – the amount you will actually borrow, after any down payment.
- Interest rate (APR) – the annual percentage rate from your loan offer. The Federal Reserve’s G.19 release put the average 24-month personal loan rate at commercial banks at 11.90% in the third quarter of 2026, which is why the example uses 12%.
- Loan term – years plus months, so a 42-month loan is 3 years and 6 months.
- Payment frequency – monthly, every two weeks or weekly.
- Start date – used to estimate your payoff date.
The result shows your payment, the total interest, the number of payments and a year-by-year split between principal and interest. Open the schedule to see the balance left at the end of each year.
The loan payment formula
Fixed-rate installment loans (personal loans, car loans, student loans and mortgages) are repaid with equal payments. Each payment is found with the standard amortization formula:
Payment = P × r(1 + r)^n ÷ [(1 + r)^n − 1]
- P = principal, the amount borrowed
- r = periodic interest rate = APR ÷ payments per year (÷ 12 for monthly)
- n = total number of payments = years × payments per year
If the rate is 0%, the payment is simply P ÷ n. Total interest is the sum of all payments minus the amount borrowed.
Worked example: $20,000 personal loan
Borrow $20,000 at 12% APR for 5 years with monthly payments:
| Step | Value |
|---|---|
| Monthly rate r | 12% ÷ 12 = 0.01 |
| Number of payments n | 5 × 12 = 60 |
| (1 + r)^n | 1.01^60 = 1.816697 |
| Monthly payment | $444.89 |
| Total of payments | $26,693.34 |
| Total interest | $6,693.34 |
In the first year you pay $2,232.86 in interest and only $3,105.80 of principal. By year five the split flips, because interest is charged on a much smaller balance.
How the loan term changes your cost
A longer term lowers the payment but adds interest. Here is the same $20,000 at 12% APR:
| Term | Monthly payment | Total interest |
|---|---|---|
| 3 years | $664.29 | $3,914.30 |
| 5 years | $444.89 | $6,693.34 |
| 7 years | $353.05 | $9,656.59 |
Going from 3 to 7 years cuts the payment by about $311 a month but costs $5,742.29 more in interest. Choose the shortest term whose payment still fits your budget with room to spare.
Monthly, biweekly or weekly payments
Some lenders schedule payments every two weeks or every week. With 26 or 52 smaller payments a year, interest is charged on a slightly lower balance between payments. For the $20,000 example, biweekly payments are $204.93 (total interest $6,641.19) and weekly payments are $102.38 (total interest $6,618.82). The saving is real but small.
A different trick saves more: on a monthly loan, add one-twelfth of your payment to every installment. That is the same as making 13 payments a year. On the example loan, an extra $37.07 a month ends the loan after 54 payments instead of 60 and saves about $726 in interest. Use the amortization calculator to model extra payments month by month.
Before you sign
- Compare APRs, not just rates. The APR includes most lender fees, so it is the fairer way to compare offers.
- Check your debt-to-income ratio. Lenders look at how much of your gross income already goes to debt. Our debt-to-income ratio calculator shows where you stand.
- Ask about prepayment penalties. Most personal and auto loans let you pay early for free, but confirm it in writing.
- Look at the total cost. A low payment over a long term can cost thousands more. The total interest figure above makes that visible.
For a car purchase with sales tax and a trade-in, use the auto loan calculator. For an Indian home or personal loan quoted as an EMI, try the EMI calculator.
Loan Calculator: frequently asked questions
How do you calculate a loan payment?
Use the formula Payment = P × r(1 + r)^n ÷ ((1 + r)^n − 1), where P is the amount borrowed, r is the APR divided by the number of payments per year and n is the total number of payments. For $20,000 at 12% over 60 months, r is 0.01 and the payment is $444.89.
What is the monthly payment on a $10,000 loan?
It depends on the rate and term. At 10% APR over 3 years, a $10,000 loan costs $322.67 a month and $1,616.19 in total interest. Stretching the same loan to 5 years lowers the payment but raises the interest.
How is interest calculated on a loan?
Each month the lender charges the periodic rate on the balance you still owe. On a $20,000 loan at 12% APR, the first month's interest is $20,000 × 1% = $200, so $244.89 of the $444.89 payment goes to principal. As the balance falls, the interest share shrinks.
How do I calculate a loan payment in Excel?
Use =PMT(rate/12, months, -amount). For example, =PMT(12%/12, 60, -20000) returns 444.89. Enter the amount as a negative number so the payment shows as positive.
How much can I borrow for a given monthly payment?
Rearrange the formula: amount = payment × (1 − (1 + r)^−n) ÷ r. A $400 monthly payment at 12% APR for 60 months supports a loan of about $17,982.
Do biweekly or weekly payments save money?
A little. Paying every two weeks on a true biweekly loan means interest is charged on a slightly lower average balance. On $20,000 at 12% for 5 years, biweekly payments of $204.93 cut total interest to $6,641.19, about $52 less than monthly payments.
Is APR the same as the interest rate?
Not always. The interest rate is the cost of borrowing the principal. The APR also folds in certain fees, such as an origination fee, so it is usually a little higher. Enter the APR to compare offers on equal terms.
How we checked this page: every figure in the examples and FAQs above is produced by this calculator and verified by automated tests against known answers, and the rules and rates come from the sources below. Last updated . Spotted a problem? Tell us.