Loan Calculator

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Calculate the monthly payment, total interest, and payoff time for a fixed-rate loan, then see what extra payments or a lump sum would save.

Quick answer: A loan's monthly payment is M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1], where P is the loan amount, r is the monthly interest rate, and n is the number of months. A $25,000 loan at 9.5% over 5 years costs $525.05 a month and $6,503 in total interest. Adding $100 to each payment clears it 11 months early and saves about $1,323.

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Optional. Counted from the first payment. Blank means month 12. Capped at the last month of the term.
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📊 Show Full Amortization Schedule
Month Payment Principal Interest Balance

📐 Loan Amortization Formula

M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1]
M= Monthly payment
P= Loan principal
r= Monthly rate (annual ÷ 12)
n= Total months

How to Use the Loan Calculator

1

Pick your currency and enter the loan amount

Choose US dollars, British pounds, Australian dollars, or Canadian dollars, then enter the amount you need to borrow, not the item price. If you are financing a $25,000 car with $5,000 down, enter $20,000.

2

Set the annual interest rate

Enter the interest rate from your lender's offer, since the monthly payment is calculated from the interest rate. If the offer only shows an APR, entering it gives a slightly higher estimate, because APR also includes mandatory fees.

3

Choose the loan term

Select the repayment period. Shorter terms have higher monthly payments but much lower total interest. A $25,000 loan at 9.5% costs $3,830 in interest over 3 years and $9,322 over 7 years.

4

Add extra payments or a lump sum (optional)

Enter an extra amount to add to every monthly payment, a one-time lump sum, or both. Set the month the lump sum is paid to see how timing changes the saving.

5

Review the results and the schedule

Check the monthly payment, total interest, payoff time, and interest saved. Open the full amortization schedule to see how every payment splits between principal and interest.

How Loan Payments Are Calculated

All amortizing loans, including personal loans, car loans, and student loans, use the same standard formula. Each payment first covers the interest that built up on the outstanding balance since the last payment, and the remainder reduces the principal. Because the balance falls over time, less interest accrues each month and more of every payment goes toward principal. The schedule under the calculator shows that shift month by month.

Fixed vs Variable Rate Loans: Which Is Better?

Fixed-rate loans keep the same interest rate and payment for the entire term, which is ideal for budget certainty. Variable-rate loans adjust with a benchmark index such as the prime rate or SOFR. They often start with a lower rate but carry payment risk if rates rise. For most consumer loans (auto, personal), fixed rates are standard. For home equity lines of credit (HELOCs) and some student loans, variable rates are common. When comparing the two, model the variable rate at its cap to see your worst-case payment before choosing.

Shopping for a Loan: Penalties and Quotes

When shopping for loans, three things matter most: the APR (covered in the comparison section below), the total interest paid over the full term, and the prepayment penalty terms. A loan with a 0.5% lower APR and a 2% prepayment penalty is often worse than a slightly higher-rate loan with no penalty, particularly if you expect to pay early or refinance. Get quotes from at least three lenders, including your own bank or credit union, an online lender, and one other bank or credit union. Pre-qualification typically uses a soft credit inquiry and does not affect your score.

How Extra Payments Shorten a Loan: Worked Example

Take a $20,000 loan at 10% APR over 5 years. The standard payment is $424.94, and paying exactly that for all 60 months costs $5,496.45 in total interest.

Now add $100 extra to every payment ($524.94 total), applied directly to principal. A month-by-month simulation of the balance shows the loan fully repaid in 47 months instead of 60, with total interest falling to $4,162.65. That is a saving of $1,333.80 and 13 months, for committing 24% more per month than required. You can reproduce these figures by entering the same loan in the calculator above.

Why is the saving disproportionate to the extra amount?

Because every extra dollar applied to principal stops accruing interest for every remaining month of the original term, not just the current one. A $100 extra payment made in month 1 removes interest that would otherwise have been charged across all 59 remaining months. The same $100 paid in month 55 saves interest for only 5 months. The same principle governs mortgage prepayment, which you can model with the amortization calculator.

Lump Sum Timing: Why the Month Matters

A bonus, tax refund, or inheritance can go toward a loan at any point, and the month you apply it changes the result more than most borrowers expect. On a $25,000 loan at 9.5% over 5 years, a single $2,000 lump sum saves:

  • $1,122.90 in interest if paid in month 1 (loan ends 5 months early)
  • $868.52 if paid in month 12 (5 months early)
  • $382.57 if paid in month 36 (4 months early)
  • $171.15 if paid in month 48 (4 months early)

The same $2,000 is worth more than six times as much in month 1 as in month 48. If you are holding cash for a lump sum payment and have no better use for it, paying sooner wins. If the money is also your emergency fund, the fund comes first. A budget calculator can help you see how much is truly spare.

Should I make extra monthly payments or one lump sum?

Both work the same way, by cutting principal early. Combining them is stronger still. On a $25,000 loan at 9.5% over 5 years, $100 extra per month plus a $2,000 lump sum in month 12 ends the loan in 45 months instead of 60 and saves $1,952.21 in interest. Before doing either, confirm that your lender applies extra money to principal and does not simply advance your next due date.

How Should You Compare Loan Offers From Different Lenders?

Is APR or interest rate the number to compare?

APR, not the headline interest rate. APR folds in origination fees and other mandatory costs and expresses them as an equivalent rate over the loan's term. A 9% loan with a 3% origination fee carries an APR of about 11.1% over 3 years and about 10.3% over 5 years. The fee's effect on APR shrinks as the term lengthens, since the fee is spread over more payments. Comparing APR to APR, at the same term, puts offers with different fee structures on an equal footing.

Does a shorter term always cost less in total?

Yes, at the same rate, because interest has fewer months to accrue. Lenders also often price shorter terms lower to begin with, which compounds the saving. The trade-off is a higher required monthly payment, so the right term is the shortest one whose payment still leaves comfortable room in the budget. Ideally the loan also lets you pay extra without penalty when cash flow allows. Confirm that in the agreement before signing.

Using This Calculator in the US, UK, Australia, and Canada

The amortization formula is identical in the US, UK, Australia, and Canada, so the currency selector changes only the symbol shown, not the math. The vocabulary does differ. UK lenders call extra payments overpayments, Australian lenders call them extra repayments, and Canadian lenders usually talk about extra payments, lump sum payments, or prepaying the loan. Whatever the label, enter the amount in the Extra Monthly Payment or One-Time Lump Sum field. Rules on early repayment charges vary by country and by lender, so check your own agreement before relying on the saving shown here.

⚠️ Disclaimer Estimates for informational purposes only. Not legal or financial advice. Consult a qualified professional.

Frequently Asked Questions

When your lender applies them to principal, extra payments reduce the balance directly, so every later month accrues interest on a smaller amount. On a 5-year $25,000 loan at 9.5%, adding $100 to each monthly payment clears the loan in 49 months instead of 60 and saves about $1,323 in interest. Enter your own figure in the Extra Monthly Payment field to see the effect on your loan.
Early. A lump sum stops interest on that amount for every month still remaining, so timing matters as much as size. On a 5-year $25,000 loan at 9.5%, a one-time $2,000 payment in month 1 saves about $1,123 in interest, while the same $2,000 paid in month 36 saves about $383. Use the Lump Sum Paid In Month field to test any timing.
It depends mostly on credit score. In the US, recent online-marketplace offer data shows average personal loan APRs of around 14% to 15% for borrowers with excellent credit, around 19% for those with good credit, and anywhere from 20% to 36% for those with fair credit. Banks and credit unions often price lower for their strongest customers. Rates also vary by lender, loan size, and term, so compare several offers by APR before choosing.
A fixed-rate loan keeps the same interest rate and monthly payment for the entire term, which makes budgeting predictable. A variable-rate loan moves with market rates, so payments can rise or fall. Fixed rates suit borrowers who value certainty. Variable rates may start lower but carry more risk over longer terms. This calculator assumes a fixed rate.
The interest rate is the base cost of borrowing, the percentage charged on the principal. APR (Annual Percentage Rate) adds mandatory costs such as origination fees and expresses the total as an annual rate. APR is the better comparison tool, so always compare loan offers APR to APR and not just rate to rate.
Add a fixed extra amount to every payment, apply windfalls such as a tax refund or bonus directly to principal, or round each payment up to the next $50 or $100. Even $50 extra per month on a 6-year $25,000 loan at 7% saves about $753 in interest and ends the loan 9 months early. Check your loan agreement for prepayment penalties first.

Sources & Methodology

Payments use the standard fixed-rate amortization formula shown above, with interest compounded monthly. Extra payments and the lump sum are applied to principal in the month they are paid. Every payment, interest, and payoff figure on this page can be checked with the calculator itself, which rounds interest totals to the nearest dollar. The APR-with-fee examples were worked out separately. Personal loan rate tiers are NerdWallet marketplace averages as of September 2026. Sources: