Whether it's a personal loan, an auto loan or financing a big purchase, the mechanics are the same: you borrow a lump sum and repay it with interest in fixed instalments. This calculator shows the monthly payment, the total interest, and how the balance falls over time.
How loan repayment works
Fixed-rate loans are amortized — every payment is identical, but the split changes. Interest is charged on the outstanding balance, so early payments lean toward interest and later ones toward principal. The result is a predictable payoff date.
Rate, term and total cost
Two levers drive what a loan costs you: the interest rate and the term. A lower rate always helps. A longer term reduces the monthly payment but increases the total interest paid — a trade-off between cash-flow comfort and overall cost.
Reading the APR
Always compare loans by APR rather than the headline interest rate, because APR includes many mandatory fees. Two loans with the same rate can have very different APRs once origination and other charges are counted.
Frequently asked questions
With the amortization formula M = P·r·(1+r)^n / ((1+r)^n − 1), where P is the amount borrowed, r is the monthly rate (APR ÷ 12) and n is the number of payments. This calculator applies it automatically.
The interest rate is the cost of borrowing the principal. APR (annual percentage rate) also folds in certain fees, so it's a truer measure of total cost when comparing loans.
It lowers the monthly payment but increases total interest, because you're borrowing for longer. Shorter terms cost less overall but demand higher monthly payments.
Usually yes, and it saves interest. Check for prepayment penalties first — most personal and auto loans don't have them, but some do.