Loan Calculator
Works for personal loans, student loans, lines of credit converted to term loans, and small business loans. Add an extra monthly payment to see how much faster you'd be debt-free.
How loan payments work
A fixed-rate loan is repaid in equal monthly installments. Each payment first covers the interest accrued that month (balance × monthly rate); the remainder reduces your principal. Because the balance shrinks every month, the interest portion falls and the principal portion grows — that's amortization.
Why extra payments are so powerful
Every extra dollar goes straight to principal, which means every future month charges interest on a smaller balance. On a $20,000 loan at 9.5% over 5 years, an extra $100/month typically saves over $1,000 in interest and cuts about a year off the payoff — try it above with your own numbers.
APR vs. interest rate
The advertised interest rate covers only interest. APR (annual percentage rate) also folds in mandatory fees like origination charges, making it the better number for comparing offers. If your loan has significant fees, enter the APR here for a more realistic total cost.
What extra payments actually save you
Take a $25,000 personal loan at 9.5% over five years. The required payment is $525.05, and you'd pay $6,502.79 in interest. Now add a little extra each month:
| Extra per month | Paid off in | Total interest | You save |
|---|---|---|---|
| $0 | 5 years | $6,502.79 | — |
| $50 | 4 years 6 months | $5,764.64 | $738 |
| $100 | 4 years 1 month | $5,179.83 | $1,323 |
| $200 | 3 years 5 months | $4,312.34 | $2,190 |
An extra $100 a month — $4,900 of additional payments — removes $1,323 of interest and eleven months of debt. Note the pattern: the savings grow faster than the extra payments, because every dollar of principal removed early stops accruing interest for the entire remaining term.
Where a personal loan makes sense — and where it doesn't
- Good use: consolidating credit card debt at a materially lower rate. Cards commonly run above 20%; a personal loan at 9–12% can cut years off the payoff. Compare with our credit card calculator before committing.
- Reasonable use: a necessary one-off expense — essential home repair, a medical bill — where the alternative is card debt.
- Poor use: financing depreciating discretionary purchases, or consolidating cards you then run back up. Consolidation only works if the cards stay at zero.
Reading a loan offer properly
Compare offers on APR, not the headline interest rate — APR folds in origination fees, so it reflects the real cost. Then check three things in the agreement: whether prepayment carries a penalty, whether the rate is fixed or variable, and whether any insurance product has been bundled in. An origination fee of 5% on a $25,000 loan is $1,250 that never reaches your bank account but that you pay interest on.