Personal Loan Calculator

What this calculator does

A personal loan is a fixed-rate, fixed-term instalment loan: a sum borrowed today, repaid in equal monthly instalments over a set number of months. The headline figure most borrowers focus on is the monthly payment, but the total interest paid over the loan life often matters more for the overall cost picture. This calculator takes three inputs — principal, annual interest rate, and term in months — and returns four numbers: monthly payment, total paid across the loan life, total interest, and total interest as a percentage of principal.

How the amortisation math works

Each monthly payment is split between interest charged on the remaining balance and principal repayment that reduces the balance. Early in the loan life, the balance is high, so the interest portion of each payment is large and the principal portion is small. As the balance falls, the split shifts: later payments are mostly principal and very little interest. The standard amortisation formula M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1) produces a constant monthly payment under which this internal split rebalances over time. The calculator works in monthly units: the annual rate is divided by 12 to get the monthly rate, and the term is the count of monthly payments.

Worked example

Take a 15,000 principal loan at 10% annual rate over 36 months. The monthly rate is 10 ÷ 12 = 0.833%. Plugging into the formula, the monthly payment works out to approximately 484. Total paid across 36 months is 484 × 36 ≈ 17,424. Total interest is 17,424 − 15,000 = 2,424, which is about 16.2% of the principal. Stretching the same loan to 60 months drops the monthly payment to about 319 — a meaningful cash-flow improvement — but raises the total paid to roughly 19,122 and the total interest to about 4,122, or 27.5% of principal. The longer term cuts the monthly figure by about a third while raising total interest by about 70%.

The term-length trade-off

A shorter term raises the monthly payment but cuts the total interest paid. A longer term does the opposite: lower monthly figure, higher total interest. The trade-off is between cash-flow strain in the months the loan is active and the total cost summed across all those months. What works depends on what is constraining the borrower — if cash flow has slack, the shorter term saves money on the total; if cash flow is tight, the longer term may keep payments affordable enough to avoid default, which is the worst outcome for total cost. The calculator shows both monthly and total figures so the trade-off is visible at a glance.

What this calculation does not capture

The figure assumes a fixed annual rate held constant for the entire term and a single, full disbursement of the principal. It does not model origination or arrangement fees (commonly 1-8% of principal, deducted at disbursement or added to the loan), late-payment fees, prepayment penalties on loans where they apply, autopay or relationship discounts, or variable-rate personal loans where the rate moves during the term. Different jurisdictions also use different rate-quoting conventions (APR, APY, AER, effective rate, nominal rate); the calculator treats the rate input as the annual rate that will be divided by 12 for monthly compounding.