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  1. Home
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Loan Calculator

Calculate your loan payments instantly

$
%

Monthly Payment

$507

$25,000 at 8% for 5 years

Principal
$25,000
Total Interest
$5,415
Total Repayment
$30,415

Interest Cost

21.7%

of loan amount

Frequently Asked Questions

Q

How do I calculate my loan payment?

Calculate loan payment using formula M = P × [r(1+r)^n] / [(1+r)^n - 1]. For a $20,000 loan at 8% for 5 years: monthly payment is $405.53, total interest is $4,332. Simply enter loan amount, interest rate, and term in our calculator for instant results.

  • P = Loan principal amount you borrow
  • r = Monthly interest rate (annual rate ÷ 12)
  • n = Total number of monthly payments (years × 12)
  • Example: $15,000 at 7% for 4 years = $359/month

The formula may look complex, but our calculator does all the math instantly. Your payment stays the same each month, but the split between principal and interest changes. Early payments are mostly interest, while later payments reduce your principal more.

Q

What affects my loan interest rate?

Five main factors affect your loan interest rate: credit score (biggest impact - excellent credit 740+ gets best rates), loan type (secured vs unsecured), loan term (shorter = lower rate), loan amount, and market conditions (Federal Reserve rates). A 100-point credit score difference can change your rate by 1-2%.

  • Improve credit score by 50+ points to qualify for better rates
  • Secured loans (collateral) have 2-4% lower rates than unsecured
  • Consider refinancing when rates drop 0.5% or more
  • Auto-pay enrollment may reduce rate by 0.25%
Credit ScoreTypical Rate RangeMonthly Payment ($20K, 5yr)
Excellent (740+)6% - 8%$387 - $405
Good (670-739)8% - 12%$405 - $445
Fair (580-669)12% - 18%$445 - $508
Poor (<580)18% - 25%+$508 - $583
Q

Should I choose a shorter loan term?

Choose shorter term (2-3 years) to save on interest but pay more monthly. Choose longer term (5-7 years) for lower monthly payments but higher total interest. On a $15,000 loan at 8%: 3-year term costs $470/month and $1,920 interest vs 5-year term at $304/month and $3,240 interest - saving $1,320 with shorter term.

Loan TermMonthly PaymentTotal InterestTotal Paid
2 years$678$1,272$16,272
3 years$470$1,920$16,920
5 years$304$3,240$18,240
7 years$234$4,656$19,656

The math is clear: shorter terms save thousands in interest. However, choose a term you can comfortably afford. Missing payments damages your credit score far more than paying extra interest. Consider making extra principal payments on a longer-term loan for flexibility.

Q

What is a good interest rate for a personal loan?

A good personal loan rate in 2026 is 8-12% for borrowers with good credit (670-739). Excellent credit (740+) qualifies for 6-8% rates. Fair credit (580-669) sees 12-18% rates. Rates below 10% are considered very good, while anything above 20% is expensive and should be avoided if possible.

  • Excellent credit: 6-8% (top 10% of borrowers)
  • Good credit: 8-12% (average rate)
  • Fair credit: 12-18% (higher risk)
  • Poor credit: 18-25%+ (very expensive)
  • Compare at least 3 lenders before accepting
Q

How can I pay off my loan faster?

Pay extra toward principal each month to save interest and pay off faster. On a $20,000 loan at 8% for 5 years ($405/month), adding just $100 extra monthly saves $1,456 in interest and pays off 15 months early. Other strategies: bi-weekly payments, annual lump sums, or refinancing to lower rate.

  • Extra $50/month saves $728 interest on typical 5-year loan
  • Bi-weekly payments (half payment every 2 weeks) = 13 monthly payments/year
  • Round up payments to nearest $50 or $100
  • Use windfalls (tax refunds, bonuses) for lump sum payments
  • Specify "apply to principal" when making extra payments

Even small extra payments make a big difference due to compound interest. The earlier you make extra payments, the more you save. Some lenders charge prepayment penalties, so check your loan agreement first. Most personal loans allow early payoff without penalties.

Example Calculations

1Personal Loan Example

Inputs

Loan Amount$20,000
Interest Rate8% APR
Loan Term5 years (60 months)

Result

Monthly Payment$405.53
Total Interest$4,331.80
Total Amount Paid$24,331.80

For a $20,000 loan at 8% interest over 5 years, you will pay $405.53 monthly. Over the life of the loan, you will pay $4,331.80 in interest.

2Small Business Loan

Inputs

Loan Amount$50,000
Interest Rate6.5% APR
Loan Term7 years (84 months)

Result

Monthly Payment$716.43
Total Interest$10,180.12
Total Amount Paid$60,180.12

A $50,000 business loan at 6.5% over 7 years requires monthly payments of $716.43, with total interest of $10,180.

Formulas Used

Monthly Payment Formula

M = P × [r(1+r)^n] / [(1+r)^n - 1]

Calculate the fixed monthly payment for a loan with compound interest

Where:

M= Monthly payment
P= Principal loan amount
r= Monthly interest rate (annual rate ÷ 12)
n= Total number of payments (months)

Total Interest Formula

Total Interest = (M × n) - P

Calculate total interest paid over the life of the loan

Where:

M= Monthly payment
n= Number of payments
P= Principal amount

Related Financial Resources

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Last Updated: Feb 12, 2026

This calculator is provided for informational and educational purposes only. Results are estimates and should not be considered professional financial, medical, legal, or other advice. Always consult a qualified professional before making important decisions. UseCalcPro is not responsible for any actions taken based on calculator results.

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