Loan computation calculator
This loan computation calculator computes the payment, interest and remaining balance for a fixed-rate loan, and shows the formula so you can verify the result by hand.
Amortization schedule
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $4,850.47 | $468.05 | $5,149.53 |
| 2 | $5,149.53 | $168.89 | $0.00 |
Computing a loan step by step
For a $10,000 loan at 6% over 24 months, the monthly rate is 0.5%. The payment formula gives about $443.21. In month one, interest is $10,000 × 0.5% = $50, so $393.21 goes to principal and the balance drops to about $9,606.79. Month two repeats with the new balance. Repeating this for 24 months ends the balance at zero, which is what the schedule above shows.
Checking a lender’s numbers
If a lender’s figure differs from yours, the usual causes are fees financed into the loan, a different day-count (daily versus monthly interest), a first payment that is more than one month away or rounding. Enter the amount actually financed, including fees, to match the contract.
$10,000 at 6% by loan length
Borrowing $10,000 at 6% over 2 years costs $443.21 a month and $637 in interest, $10,637 in total. Shorter terms raise the payment but cut the interest, and longer terms do the reverse. The table shows the trade-off across common terms.
| Term | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 12-month | $860.66 | $328 | $10,328 |
| 2-year | $443.21 | $637 | $10,637 |
| 3-year | $304.22 | $952 | $10,952 |
| 4-year | $234.85 | $1,273 | $11,273 |
| 5-year | $193.33 | $1,600 | $11,600 |
| 7-year | $146.09 | $2,271 | $12,271 |
| 10-year | $111.02 | $3,322 | $13,322 |
How your rate changes the cost
Personal loan rates vary widely with credit score, from the mid single digits for strong borrowers to 30% or more for weak credit. On $10,000 over 2 years, moving from 6% to 9% adds $327 in interest.
| APR | Monthly payment | Total interest |
|---|---|---|
| 3% | $429.81 | $315 |
| 4.5% | $436.48 | $475 |
| 6% | $443.21 | $637 |
| 7.5% | $450.00 | $800 |
| 9% | $456.85 | $964 |
How much can you borrow for a given payment?
Working backwards at 6% over 2 years, here is the loan size each monthly payment supports.
| Monthly payment | Loan amount |
|---|---|
| $200/month | $4,513 |
| $300/month | $6,769 |
| $400/month | $9,025 |
| $500/month | $11,281 |
When is half of a $10,000 loan repaid?
With a $443.21 payment, the balance falls below half ($5,000) after 13 payments, about 1.1 years into a 2 years loan. Because interest is highest at the start, the second half of the loan is paid down much faster than the first.
| After | Balance left | Paid so far |
|---|---|---|
| 1 year | $5,150 | $5,319 |
Frequently asked questions
What is loan computation?
It is calculating the payment, total interest and balance of a loan from the amount, rate and term using the standard amortization formula.
Why might my lender’s payment differ slightly?
Fees, daily interest, odd first periods and rounding can change the payment by a few dollars.
How is a loan payment calculated?
The payment is principal × r ÷ (1 − (1 + r)^−n), where r is the monthly rate (APR ÷ 12) and n is the number of months. Each payment covers that month’s interest first, and the rest reduces the balance.
What is the difference between interest rate and APR?
The interest rate is the cost of borrowing the money. APR also includes certain fees, so it is the better number for comparing offers. This calculator treats the rate you enter as the rate that accrues on the balance.
Related calculators
Estimates from standard loan formulas, not a loan offer or financial advice. Example rates are assumptions: use your own quote.