What to enter
- Loan amount
- The amount you are approved to borrow, before any fee is subtracted. If a lender takes an origination fee out of the proceeds, still enter the full loan amount here and put the fee in its own field.
- Interest rate (APR)
- The annual rate from the loan offer. Personal loan rates vary widely with credit history, income and the lender. Compare offers on the same amount and term.
- Loan term and unit
- Enter the length and choose months or years. Terms up to 40 years (480 months) are supported. A longer term lowers the payment and raises the interest you pay in total.
- Origination fee (optional)
- Some lenders charge a fee, often expressed as a percentage of the loan, that is deducted before you receive the money. Entering it shows how much cash you actually get and what the loan really costs.
- Payment schedule
- Monthly is standard. The biweekly option models paying half of the monthly payment every two weeks, which adds up to one extra monthly payment each year.
How to read your results
The headline figure is the payment for the schedule you chose. The table shows total interest, the total of all monthly payments, and the length of the loan. If you enter a fee, an additional block shows the fee in dollars, the cash you receive, the total cost of borrowing (interest plus fee) and the effective APR, which is the annual rate at which the payments you make correspond to the cash you actually receive. A loan with a modest stated rate and a large fee can cost as much as a loan with a higher rate and no fee, and the effective APR makes that visible.
The bar shows how each dollar you repay splits between principal, interest and fees. The amortization schedule beneath the results lists each payment with its interest and principal parts and the remaining balance. Switch between the yearly summary and the month-by-month view.
How the loan is calculated
A fixed-rate installment loan with equal monthly payments uses the standard payment formula:
Each month, interest is the current balance times r, and the rest of the payment reduces the balance. Total interest is the sum of the interest portions, or equivalently total payments minus the amount borrowed.
With an origination fee, the cash received is P × (1 − fee%). The effective APR solves for the rate that makes the present value of all payments equal to that smaller amount, using the same actuarial method that underlies APR disclosures. There is no closed-form answer, so the calculator finds it by repeated bisection until it converges.
In the biweekly option, half the monthly payment is paid every 14 days, 26 times a year, and interest accrues on the balance every 14 days. Because 26 half payments equal 13 monthly payments, you pay a bit more each year than under the monthly schedule and the loan ends sooner.
Worked example
$20,000 at 9.5% for 48 months
The monthly payment is $502.46. Over 48 payments the total is $24,118, so the loan costs $4,118 in interest.
With a 5% origination fee, the lender keeps $1,000 and you receive $19,000, but the payment stays $502.46 because it is based on the full $20,000. Interest plus fee comes to $5,118, and the effective APR is 12.23% rather than 9.50%.
Changing the term. At 36 months the payment is $640.66 with $3,064 in interest. At 60 months it is $420.04 with $5,202 in interest. The longer loan lowers the monthly burden by $220.62 but costs $2,139 more in total.
Biweekly payments. Paying half the monthly amount every two weeks pays the loan off in 3 years 8 months instead of 48 months and reduces interest to $3,677, a saving of $441, under the assumptions below.
Comparing loan offers
Compare offers on the same amount, and look at three things together: the monthly payment you can fit into your budget, the total you will repay, and the effective APR after fees. A lower payment usually means a longer term, which usually means more interest. A lender that advertises a low rate may also add fees, so the APR and the fee lines on the loan disclosure matter as much as the headline rate.
Check whether the loan has a prepayment penalty, whether the rate is fixed or variable, and how late payments are handled. If you are borrowing to consolidate debt, compare the total cost against your current debts, not just the monthly payment. The debt payoff calculator shows how quickly your current balances could go away with the payment you already make.
Many lenders hold a partial payment until a full monthly payment has accumulated, which removes most of the benefit shown for the biweekly plan. Some third-party services also charge fees to set up biweekly plans. The same saving is available for free by adding one-twelfth of a payment to each monthly payment, if the lender applies the extra to principal.
Assumptions and limits
The calculator assumes a fixed rate, equal payments and interest that accrues monthly on the outstanding balance. Real loans can differ: some use daily interest accrual, some charge late fees or insurance, and variable-rate loans change over time. The effective APR shown includes only the fee you enter. Loans with additional charges, such as credit insurance or documentation fees, would have a higher true APR. For mortgages, use the mortgage calculator, which includes property tax and insurance, and for vehicles, use the auto loan calculator, which includes sales tax and trade-ins.
Frequently asked questions
What is the difference between the interest rate and APR?
The interest rate is the price of the borrowed money. The APR expresses the yearly cost including certain fees, so a loan with an origination fee has an APR higher than its rate. This calculator shows the effective APR when you enter a fee.
Why is the payment the same with and without the fee?
Because the fee is taken out of the money you receive, not added to the payment. The payment is set by the loan amount, rate and term, so the fee makes the loan more expensive by reducing what you actually get.
How can I pay off a loan faster?
Make payments larger than the required amount and confirm that the extra goes to principal, choose a shorter term when you can afford it, or make an additional payment each year. Check the loan terms for prepayment penalties first.
Does a longer term save money?
It lowers the monthly payment but usually raises the total cost, because interest accrues for longer. The comparison in the worked example shows the trade-off for a common loan size.
Can I use this for student loans or credit cards?
It works for fixed-rate installment loans. Credit cards are revolving debt with changing balances, so the debt payoff calculator is a better fit. Student loans with deferment, income-driven plans or capitalized interest follow their own rules that this tool does not model.