Personal Loan Calculator
Estimate your monthly payments, total interest, and see a full amortization schedule.
Loan Summary
Loan Breakdown Charts
Amortization Schedule
| # | Date | Payment | Principal | Interest | Extra Payment | Ending Balance |
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What is a Personal Loan and How to Use This Calculator
A personal loan is a type of installment loan that provides borrowers with a lump sum of money, which is then paid back in fixed, regular payments over a set period. Unlike secured loans (like a mortgage or auto loan), personal loans are often unsecured, meaning they don't require collateral. This calculator helps you understand the financial implications of taking out a personal loan by breaking down the costs involved.
To use the calculator, start by entering the total **Loan Amount** you wish to borrow. Next, input the **Annual Interest Rate (APR)** offered by the lender. Finally, specify the **Loan Term**, which is the duration over which you'll repay the loan, either in years or months. The tool will instantly compute your periodic payment and show how much you'll pay in total interest.
How Your Periodic Payment (EMI) is Calculated
The core of any loan calculation is the formula for the Equated Monthly Installment (EMI) or periodic payment. It ensures that each payment contributes to both the principal and the interest, gradually reducing the loan balance to zero by the end of the term. The standard formula is:
Payment = P * [r(1+r)^n] / [(1+r)^n - 1]- P is the principal loan amount.
- r is the periodic interest rate (the annual rate divided by the number of payments per year).
- n is the total number of payments (the loan term in years multiplied by the number of payments per year).
This formula precisely balances the interest accrual with principal reduction over the loan's life.
How Extra Payments Reduce Interest & Term
One of the most powerful features of this calculator is its ability to simulate the effect of extra payments. When you pay more than your required periodic payment, the additional amount is applied directly to the principal balance. Because interest for the next period is calculated on the new, lower balance, less interest accrues. This creates a snowball effect: more of your future payments go toward principal, you pay off the loan faster, and you save a significant amount in total interest.
Interest-Only vs. Amortizing Payments
Most personal loans are **amortizing**, which means each payment is split between principal and interest. In the beginning, a larger portion of your payment covers interest. As the balance decreases, this shifts, and more of your payment goes toward reducing the principal.
Some loans offer an **interest-only** period. During this time, your payments are lower because they only cover the accrued interest, and the principal balance remains unchanged. While this can be useful for short-term cash flow management, it means you're not building equity. Once the interest-only period ends, your payments will increase substantially to cover both principal and interest over the remaining term.
Fees, APR, and the True Cost of Borrowing
The **interest rate** is just one part of a loan's cost. Lenders often charge fees, such as origination fees (for processing the loan) or late payment fees. The **Annual Percentage Rate (APR)** is a broader measure that includes both the interest rate and any upfront fees, expressed as an annual percentage. For this reason, the APR is usually higher than the advertised interest rate and gives a more accurate picture of the loan's total cost. This calculator allows you to include upfront fees to see their impact on your total payments.
Frequently Asked Questions
What is an EMI?
An EMI (Equated Monthly Installment) is the fixed amount you pay to a lender each month, which covers both interest and principal, ensuring the loan is fully repaid over the agreed term.
How do extra payments reduce interest?
Extra payments reduce the principal loan balance directly. This means less interest accrues in subsequent periods, which shortens the loan term and reduces the total interest paid over the life of the loan.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the money, while the APR includes the interest rate plus any lender fees (like origination fees). APR provides a more complete measure of the loan's total cost.
Can I make interest-only payments?
Some loans allow for an initial interest-only period where you only pay the interest. This results in lower initial payments but does not reduce your principal balance. Your payments will rise significantly after this period ends.
How accurate are the calculator results?
This tool provides very accurate estimates based on standard financial formulas. However, results are for informational purposes. Always consult your lender for the exact loan terms, as their calculations or fee structures may vary slightly.
Does this calculator include fees?
Yes, you can add optional upfront fees (as a fixed amount or a percentage) to see how they impact your total loan cost. You can also choose whether these fees are paid upfront or added to the loan balance (capitalized).
Disclaimer: The calculations provided by this tool are for estimation purposes only and are not a guarantee of credit. Consult a qualified financial advisor or lender for precise terms and financial advice.
