Personal Loan Calculator
Calculate Personal Loan instantly — see monthly payments, total interest, and full amortization schedule.
Reviewed by Sahil, Senior Finance & Tax Editor · Editorial policy
Personal Loan Calculator Formula
M = P × [r(1+r)^n] / [(1+r)^n – 1]; APR includes origination fees in effective rate
Where M = Monthly Payment, P = Loan amount (principal), r = Monthly interest rate (annual rate / 12 / 100), n = Number of monthly payments. The effective APR is calculated by finding the rate that equates the present value of all payments to the actual amount received (loan amount minus origination fee), giving the true cost of borrowing.
Personal Loan Calculator — Worked Examples
Example 1: Personal Loan with Origination Fee
Problem:Calculate the monthly payment and true APR for a $20,000 personal loan at 10% interest for 48 months with a 4% origination fee.
Solution:Step 1: Calculate origination fee\n Fee = $20,000 × 4% = $800\n Amount received = $20,000 - $800 = $19,200\n\nStep 2: Calculate monthly payment (on full $20,000)\n r = 10% / 12 = 0.8333% = 0.008333\n n = 48 months\n M = 20000 × [0.008333(1.008333)^48] / [(1.008333)^48 – 1]\n M = 20000 × [0.008333 × 1.4894] / [1.4894 – 1]\n M = 20000 × 0.012412 / 0.4894\n M = $507.25\n\nStep 3: Calculate totals\n Total payments = $507.25 × 48 = $24,348\n Total interest = $24,348 - $20,000 = $4,348\n Total cost = $4,348 + $800 = $5,148\n\nStep 4: Effective APR\n You received $19,200 but pay back $24,348\n Effective APR ≈ 12.15% (accounting for fee)
Result:Monthly: $507.25 | Total interest: $4,348 | Total cost: $5,148 | Effective APR: 12.15%
Example 2: Comparing Loan Terms
Problem:Compare a $10,000 personal loan at 8.5% interest with no origination fee for 24 months vs. 48 months.
Solution:24-month term:\n M = 10000 × [0.007083(1.007083)^24] / [(1.007083)^24 – 1]\n M = $454.36\n Total paid = $454.36 × 24 = $10,904.64\n Total interest = $904.64\n\n48-month term:\n M = 10000 × [0.007083(1.007083)^48] / [(1.007083)^48 – 1]\n M = $246.67\n Total paid = $246.67 × 48 = $11,840.16\n Total interest = $1,840.16\n\nComparison:\n Monthly difference: $454.36 - $246.67 = $207.69\n Interest difference: $1,840.16 - $904.64 = $935.52\n The 48-month term saves $208/mo but costs $936 more total
Result:24-mo: $454/mo, $905 interest | 48-mo: $247/mo, $1,840 interest | Difference: $935
Personal Loan Calculator — Frequently Asked Questions
What is the difference between interest rate and APR on a personal loan?
The interest rate is the base cost of borrowing the principal amount, expressed as an annual percentage. APR (Annual Percentage Rate) includes the interest rate plus all additional fees and charges, such as origination fees, giving you the true total cost of borrowing. For personal loans, the difference can be significant. For example, a loan with a 9% interest rate and a 5% origination fee has an effective APR of approximately 12.2% on a 3-year term, because you receive less money upfront but repay based on the full amount. Federal law requires lenders to disclose the APR so consumers can compare offers on equal footing. When comparing personal loan offers from different lenders, always compare APR rather than just the stated interest rate, as this accounts for all costs and gives a true apples-to-apples comparison.
How does an origination fee affect my personal loan?
An origination fee is an upfront charge by the lender to process your loan, typically ranging from 1% to 8% of the loan amount. This fee is usually deducted directly from your loan proceeds, meaning you receive less money than you borrow. For instance, if you borrow $15,000 with a 5% origination fee ($750), you only receive $14,250 but must repay the full $15,000 plus interest. This effectively raises your borrowing cost above the stated interest rate. To account for this, you may need to borrow more than your actual need to receive the desired amount after the fee. Not all lenders charge origination fees — some online lenders offer fee-free personal loans with competitive rates. When comparing offers, calculate the total cost including fees, or compare APRs which incorporate origination fees into a single rate for easy comparison.
What credit score do I need for a personal loan?
Credit score requirements vary significantly by lender and directly impact your interest rate. Generally, excellent credit (740+) qualifies for the best rates, typically 6%-10% APR. Good credit (670-739) receives competitive rates around 10%-15%. Fair credit (580-669) can still obtain loans but at higher rates of 15%-25%. Poor credit (below 580) limits options to subprime lenders charging 25%-36% or higher. Some lenders have minimum score requirements: most banks require 660+, credit unions may accept 600+, and online lenders vary widely from 580-700+ minimums. Before applying, check your credit reports for errors at AnnualCreditReport.com, as correcting mistakes could boost your score significantly. If your score is below 670, consider spending 3-6 months improving it before borrowing — each 20-point improvement can reduce your rate by 1%-2%, potentially saving thousands over the loan term.
Is it better to get a personal loan or use a credit card?
The choice depends on the amount, repayment timeline, and available rates. Personal loans are generally better for larger amounts ($5,000+) with fixed repayment schedules because they offer lower interest rates (typically 6%-20% vs. credit card rates of 18%-28%), fixed monthly payments that force disciplined repayment, and a defined payoff date. Credit cards are better for smaller, short-term needs, especially if you can pay the balance within a 0% introductory APR period (typically 12-21 months). However, credit cards create minimum payment traps where paying only minimums can take decades to pay off the balance. For debt consolidation, personal loans almost always win because their fixed terms and lower rates result in significant interest savings. One hybrid option is a balance transfer card with a 0% APR offer, but watch for balance transfer fees (3%-5%) and the rate that applies after the promotional period ends.