Credit: Rockaa/GetTyimages; Illustrations by Hunter Newton/Bankrate
There are two ways to calculate your loan payment. Test your mathematics skills with basic loan calculation formulas. Another, more common way is to use dozens of online loan calculators offered to calculate numbers on personal, car, or mortgages. A loan calculator gives you general ideas about what to expect with any type of loan payment without having to fill out your application.
How to calculate your loan repayment
The easiest way to calculate your personal loan payments is to use an online loan calculator. This gives you a general idea of what to expect from your monthly payments without filling out the application. Especially if you’ve already prequalified for a loan and know the offer, try out different loan terms, interest rates and amounts to see the difference in costs. If you prefer to do math by hand, you can also use formulas of interest.
Most loans are amortized on loans. These apply some of the monthly payments for your main balances and interests. Your principal will expand equally to your loan repayment period. You can choose the number of years of office, but you usually get 12 payments per year.
How to use amortization loan repayment formula
To calculate payments over the loan period, multiply the years by 12 years. Suppose you have won a car loan for $20,000 on your APR APR and a five-year repayment timeline. Here’s how to calculate your loan profit payments:
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Split your interest by the number of payments you make each year. Typically, the number is 12. One payment per month.
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Multiply that number by the initial balance of your loan. This starts with the full amount you borrowed. For the given number, the loan payment formula is as follows:
In this example, you’ll be paying $100 in interest for the first month. As you continue to pay off your loan, much of your payments will be directed towards your principal balance and less interest. You can understand your monthly principal and interest payments and see how your loan balance will drop with each payment on your amortization schedule.
How loan payments work
Personal loans are a type of installment loan. This means that you will be paid on a fixed schedule for months or years before fully paid. A portion of each payment will be directed towards your outstanding loan balance and unpaid interest known as amortization.
Three factors constitute monthly personal loan payments.
The total cost of a loan depends on the interest you qualify for, the amount you borrow, the year you choose to pay, and the upfront fee you pay. The APR of the loan – an annual rate – is important as it reflects the total amount you pay between interest and fees.
Loan interest rate vs April
Monthly payments are based on interest rates, not APR. The APR for your loan includes prepaid fees that you need to pay, such as the origination fee, but it will not affect the amount of interest unless you choose to wrap the fees in the loan rather than deducted from the total amount.
For example, compare two $20,000 loans. Both have a 60-month term and an interest rate of 12.26%. This is the average personal loan rate as of May 2025. Lender A has a 5% origination fee. Lender B does not have an origination fee.
| Lender a | Lender b | |
|---|---|---|
| interest rate | 12.26% | 12.26% |
| April | 14.46% | 12.26% |
| Monthly payment | $447.52 | $447.52 |
| Total interest paid | $6,851.27 | $6,851.27 |
| Total fee | $1,000 | $0 |
| Total cost | $7,851.27 | $6,851.27 |
The total amount you pay is the same, but you will be making more payments with Lender A. If you use a calculator to get the best option for your budget, balance the total cost of your loan.
A computer for estimating potential costs
If you’re not a fan of complex formulas, let the loan calculator do all the hard work. Whether you buy a home and need a mortgage, or need quick cash from your personal loan to pay for emergency repairs, there are calculators that can calculate numbers.
How to use loan payment calculations
Since the calculator does most of the work for you, it’s helpful to know when these loan calculators will help you plan your money.
- Compare payments: If payments are tense for a 3-year term, consider making an additional payment for the 5-year term instead. If you revert to a 5-year payment, you won’t save much, but you won’t be locked in by the higher short-term payments either. Make sure your lender does not have early repayment penalties.
- Compare the total interest: The repayment period can affect the total cost of your loan. In the long term, it means there is a higher interest rate over the life of the loan, although less than monthly.
- Know which zones you will fly immediately: You may be surprised at how expensive or low your personal loan payments are. If you have a financial crisis in your life, it’s better to know what payments look like in advance than when you need cash at a high speed.
Conclusion
It’s best to calculate your loan payments and costs long before you need money. Personal loan rates can vary from 6.5% to almost 36%, so it’s important to at least have a ballpark idea of what your payments will look like in advance.
Getting the minimum payment may not always be the best option for your finances. Please note the difference between the cited interest rate and APR. That way, don’t take out a loan for a high price. The lowest rate may not be the best deal if it comes with expensive origination costs.
