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Loan Calculator

Free loan calculator for any fixed-rate loan: monthly payment, total interest, payoff date and a year-by-year amortization schedule with extra-payment savings.

Last reviewed: January 2026 · Tax data verified against IRS Publication 15-T & state revenue departments

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How This Calculator Works

Every fixed-rate installment loan — personal, signature, home-improvement, even a standard student-loan plan — runs on the same payment formula. Type the amount, the APR and the term into this calculator and it computes the level monthly payment, the total interest and the full year-by-year payoff path, with an optional extra monthly payment layered on top.

The payment is the standard annuity M = P x [r(1+r)^n] / [(1+r)^n - 1]. What the formula does not show is the split inside each payment: interest is charged on the remaining balance, so the first payment is the most interest-heavy. On the default $25,000 loan at 8% APR for 60 months, the $506.91 payment starts as $166.67 of interest (32.9%) — while the final payment carries only $3.36 of interest. That steady shift is amortization, and it is why early extra payments are disproportionately powerful.

Terms are where money quietly leaks. On $25,000 at 8% APR: 36 months costs $783.41 per month and $3,202.73 in interest; 60 months costs $506.91 and $5,414.59; 84 months costs $389.66 and $7,731.05. Each step longer lowers the payment by less and less while adding more and more interest — the exact shape of the trade you should always price out before signing.

Extra payments are the opposite lever: pure gain. Adding $50 per month to the default loan retires it in 54 months instead of 60 and saves $606.86 in interest; adding $100 finishes in 49 months and saves $1,089.30. Because every skipped month at the tail of the loan is interest you never pay, the payoff from a small extra is surprisingly linear — roughly $1,089 of interest saved per $100 of monthly extra on the default five-year loan.

Two fine-print items change the real cost. First, APR is not the interest rate: it folds fees in, so a 5% origination fee on a $25,000 loan is $1,250 you never see but still repay. Second, payoff freedom: most mainstream loans today have no prepayment penalty, but verify it in your note. To compare a car-specific deal (taxes, trade-ins), use the auto loan calculator; for unsecured personal-loan pricing bands, the personal loan calculator.

How It's Calculated

Formula

M = P x [r(1+r)^n] / [(1+r)^n - 1] (r = APR / 12, n = total payments)

Step-by-Step

  1. 1Start with the amount borrowed P (include any fees you finance; exclude fees paid in cash).
  2. 2Convert the annual rate to a monthly rate: r = APR / 12 (8% APR gives r = 0.0066667).
  3. 3Set the total number of payments n (years x 12, plus any extra months).
  4. 4Compute the level payment M = P x [r(1+r)^n] / [(1+r)^n - 1]; if the APR is 0, M is simply P / n.
  5. 5Each month, interest = balance x r and principal = M - interest; add any extra amount to principal.
  6. 6Repeat until the balance reaches zero; sum the interest column for the total cost of the loan.

Example

$25,000 at 8% APR for 5 years (60 payments): r = 0.0066667, n = 60, so M = $506.91 per month. Total repaid is $30,414.59, of which $5,414.59 is interest. Adding $100 per month retires the loan in 49 payments and cuts total interest to $4,325.29 — a saving of $1,089.30 and 11 months.

For detailed data sources and full methodology, see our Methodology & Data Sources page.

Key Rates & Data for 2026

Unsecured loan APR, excellent credit (typical 2026)

~8% - 12%

Unsecured loan APR, good credit (typical 2026)

~13% - 18%

Credit-card APR for comparison (typical 2026)

~20%+

Payment per $1,000 @ 8% / 60 mo

$20.28

Payment per $1,000 @ 12% / 60 mo

$22.24

Common installment terms

12 - 84 months

Frequently Asked Questions

How do you calculate a monthly loan payment?

Use the fixed-rate annuity formula M = P x [r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the APR divided by 12, and n is the number of payments. Example: $25,000 at 8% APR for 60 months gives r = 0.0066667 and M = $506.91. A quick field estimate: every $1,000 borrowed at 8% for five years costs about $20.28 per month, so $25,000 is roughly 25 x $20.28 = $507 — within pennies of the exact answer. The formula assumes a level payment on a fixed rate; variable-rate loans and revolving credit cards do not amortize this way.

What is the difference between APR and interest rate?

The interest rate is the pure cost of borrowing; the APR bundles that cost with most fees, expressed as a yearly rate so offers are comparable. On a $25,000 loan, a 5% origination fee is $1,250 deducted upfront — you might receive $23,750 but repay based on $25,000. If the note rate is 8%, the APR on that structure is meaningfully higher than 8% because you are paying interest on money that never reached your account. That is why regulators require APR disclosure, and why you should compare loan offers by APR, not by the advertised rate. Our calculator uses APR directly: enter the APR from your loan offer, not the teaser 'rates as low as' figure.

How much does an extra $100 a month save on a loan?

On the default $25,000 loan at 8% APR for 60 months: adding $100 per month finishes the loan in 49 payments instead of 60 and cuts total interest from $5,414.59 to $4,325.29 — a $1,089.30 saving. Adding just $50 per month saves $606.86 and finishes in 54 payments. The savings scale with both the rate and the remaining term: extra dollars at a 12% APR work about 50% harder than at 8%, and dollars added in year one of a long loan do more than dollars added near the end. The mechanics are simple — every extra dollar goes to principal, so every later balance is smaller and accrues less interest.

Why does my first payment barely reduce the balance?

Because interest is charged on the entire remaining balance, and the balance is at its maximum in month one. On $25,000 at 8% APR, the first month's interest alone is $166.67 — 32.9% of the $506.91 payment — so only $340.24 retires principal. By the final payment, interest has shrunk to $3.36 and nearly the whole payment is principal. This front-loading is not a fee or a trick; it is the only way a level payment can amortize a declining balance. It does mean that extra principal in the early months is the most valuable money you can spend on the loan — see the with/without comparison this calculator computes as you type.

Should I choose a shorter or longer loan term?

On $25,000 at 8% APR, the menu looks like this: 24 months, $1,130.68 per month, $2,136.37 interest; 36 months, $783.41, $3,202.73; 48 months, $610.32, $4,295.51; 60 months, $506.91, $5,414.59; 84 months, $389.66, $7,731.05. The rule: choose the shortest term whose payment you can absorb without straining your emergency fund. A useful hybrid is to sign the longer term for flexibility, then voluntarily pay the shorter term's payment — you get the interest savings of the short term with the option to drop back if money gets tight. That strategy is exactly what the extra-payment input models here.

Are there penalties for paying off a loan early?

Most modern personal, auto and mortgage loans carry no prepayment penalty — federal rules have banned them on most residential mortgages since 2014, and mainstream personal-loan lenders advertise 'no prepayment penalty' as a feature. But it is not universal: some subprime auto notes and small-dollar loans still include them, and some lenders apply extra payments as 'paid ahead' amounts rather than principal reductions, which quietly destroys the interest-saving benefit. Before paying extra, confirm two things in your note: no prepayment penalty, and instructions for applying extra amounts to principal. The savings numbers in this calculator assume extra dollars retire principal immediately.

Can I use this calculator for any type of loan?

Yes, for any fixed-rate loan with a level payment: personal loans, auto loans, home-improvement loans, standard student-loan repayment plans and mortgages. It does not fit revolving balances (credit cards, HELOC draws), variable-rate loans (ARMs), or income-driven student plans, because those do not amortize on a fixed annuity. For car loans with sales tax, trade-ins and dealer fees, the <a href="/auto-loan-calculator">auto loan calculator</a> is more precise; for mortgage specifics like escrow and PMI, use the <a href="/mortgage-calculator">mortgage calculator</a>; and for a full year-by-year principal/interest table of any amount, the <a href="/amortization-calculator">amortization calculator</a>.

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<a href="https://thetaxcalc.com/loan-calculator" title="Loan Calculator 2026 — Monthly Payment, Interest & Payoff Date">Loan Calculator 2026 — Monthly Payment, Interest & Payoff Date</a>

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