Loan Calculator

Any fully amortizing fixed-rate installment loan: personal loans, auto loans, student loans, small-business term loans, home-equity loans, and fixed-rate mortgages. The math doesn't care what the loan is called — if the payment is fixed and the loan pays itself off over a set number of months, this calculator works. For mortgages with PMI/taxes/insurance or auto loans with trade-ins and sales tax, use the dedicated mortgage or car-loan calculator for a fuller picture.

The interest rate is the cost of borrowing the principal, expressed as an annual percentage. APR (Annual Percentage Rate) includes the interest rate plus most lender fees — origination, discount points, and certain closing costs — also expressed annually. Federal Truth in Lending rules require lenders to disclose APR so borrowers can compare offers apples-to-apples. Two loans with the same rate can have very different APRs when one has heavy fees.

Lenders look at debt-to-income ratio (DTI), credit score, and collateral. A common rule of thumb: total monthly debt payments shouldn't exceed 36-43% of gross monthly income. Use this calculator to work backwards: enter a monthly payment you can afford, then vary loan amount or term until you find a borrowing range. Pre-qualifying with a lender will give you a more accurate number based on your actual finances.

Amortization is the process of paying off a loan in equal periodic payments where each payment covers both interest and principal. Early payments are mostly interest because interest is charged on the full outstanding balance. As principal is paid down, the interest portion of each payment shrinks and the principal portion grows. An amortization schedule lists every payment with its interest and principal split.

It depends on your other options. Prepaying a 9% personal loan gives you a guaranteed 9% return — usually better than a savings account but possibly worse than a long-term stock index fund. Generally, prepay high-interest debt (above 6-7%) once your emergency fund is funded and you're capturing any employer 401(k) match. Always confirm there's no prepayment penalty first.

A balloon payment is a large lump sum due at the end of a loan that didn't fully amortize over the regular payment schedule. Some commercial loans, short-term auto financing, and unusual mortgages include them. This calculator assumes full amortization — every payment is the same and the balance reaches zero on the final payment. If your loan has a balloon, ask the lender for a custom amortization schedule.

A longer term lowers the monthly payment but increases total interest, often dramatically. A $25,000 loan at 8%: 36 months costs about $3,190 in interest, 60 months costs about $5,410, and 84 months costs about $7,720. You're paying interest on a larger remaining balance for more months. Pick the shortest term whose monthly payment you can comfortably afford.

Roughly: 760+ qualifies for the best advertised rates, 700-759 gets near-best, 640-699 is approved with markup, and below 640 is often subprime with much higher rates or denial. For personal loans, the spread between top-tier and bottom-tier rates can be 15 percentage points or more. Even a 30-40 point credit score improvement before applying can save thousands in interest.

APR is disclosed by the lender and assumes you pay on schedule. Effective rate accounts for the actual compounding of interest paid relative to principal received — if a lender charges fees upfront, the effective rate is higher than the nominal rate because you didn't get the full principal but still owe interest on it. APR is the regulated comparison number; effective rate is a more academic figure.

Almost always yes, though some loans charge prepayment penalties. Federal law prohibits most prepayment penalties on home mortgages after the first three years, and removes them entirely for higher-priced mortgages. Personal and auto loans may include them — read your loan agreement before the close date. When prepaying, instruct the lender in writing that the extra is applied to principal, not future payments.

The interest rate is the base cost of borrowing money. APR (Annual Percentage Rate) includes the interest rate plus any fees, giving you the true cost of the loan. When comparing loans, use APR for an apples-to-apples comparison.

It depends on your priorities. A shorter term means higher monthly payments but less total interest. A longer term means lower monthly payments but more interest over time. Choose based on what fits your budget while minimizing unnecessary interest.