Loan Payment Calculator
Works for any fixed-rate loan repaid in equal monthly instalments: personal loans, student loans, home improvement finance, or anything else amortising. Enter what you are borrowing and the terms you have been offered.
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How loan repayments work
An amortising loan splits every payment between interest on what you still owe and principal that reduces the balance. Because the balance falls over time, the interest portion shrinks and the principal portion grows, even though the payment itself never changes.
That front-loading is why paying a loan off early saves less than people expect near the end, and far more than they expect at the start. An extra payment in year one removes interest that would have accrued for the entire remaining term.
APR is the number to compare
A headline interest rate can exclude arrangement or origination fees. The APR folds those in, which is why two loans with the same interest rate can carry different APRs. When comparing offers, compare APRs, and check whether any fee is deducted from what you receive rather than added to what you repay.
Term is a trade, not a free choice
Extending the term reduces the payment and increases the total cost, because interest accrues for longer on a balance that falls more slowly. The right term is the shortest one whose payment you can sustain in a bad month, not the one that looks most comfortable in a good one.
Watch for prepayment penalties
Most consumer loans allow early repayment without charge, and on a standard amortising loan that saves the remaining interest. Some agreements use precomputed interest or carry an early-settlement fee, which changes the maths entirely. Check before assuming you can clear it early.
Frequently asked questions
What is a good interest rate on a personal loan?
It depends almost entirely on credit score and term. Borrowers with strong credit are offered rates several points below the market average. Always get at least one quote from your own bank or credit union to compare against.
Does paying extra actually help?
Yes, and more than most people expect, provided the extra is applied to principal. Every dollar of principal removed stops accruing interest for the whole remaining term. Confirm with the lender that extra payments reduce principal rather than prepaying the next instalment.
Why is my first payment mostly interest?
Interest is charged on the outstanding balance, which is at its largest at the start. As the balance falls, the same fixed payment covers less interest and more principal.