Your monthly payment comes down to three inputs: how much you borrow, the interest rate and the number of years. The calculator turns them into equal monthly payments, each covering that month's interest and part of the balance.
The total interest is the real price of the loan. It's the figure that grows fastest when you stretch the term, and the one that extra payments cut.
Why the first payments are mostly interest
P is the amount you borrow, r is the monthly rate and n is the number of monthly payments. The monthly rate is the yearly rate divided by 12, so 12% a year is 1% a month.
Interest is charged each month on whatever you still owe. Borrow $10,000 at 12% over five years and you'll pay $222.44 a month. In the first month, $100 of that is interest and only $122.44 reduces the balance.
As the balance falls, so does the interest, and more of the same payment goes to the loan itself. That's also why an extra payment made early saves more than one made near the end.
A longer term lowers the payment but raises the bill
Here's the same $10,000 at 12% over five different terms. Only the term changes, so you see its effect on its own:
| $10,000 at 12% | Monthly payment | Total interest | Total of payments |
|---|---|---|---|
| 2 years | $470.73 | $1,298 | $11,298 |
| 3 years | $332.14 | $1,957 | $11,957 |
| 4 years | $263.34 | $2,640 | $12,640 |
| 5 years | $222.44 | $3,347 | $13,347 |
| 7 years | $176.53 | $4,828 | $14,828 |
Going from two years to seven cuts the payment by $294.20. But you'd pay 3.7 times as much interest: $4,828 instead of $1,298.
The last step is the priciest. Moving from five years to seven saves $45.91 a month and adds $1,481 of interest. That's about $32 of extra interest for every dollar of monthly relief.
Interest rate or APR: which goes in the box?
The Consumer Financial Protection Bureau (CFPB) describes the interest rate as what you pay the lender to borrow. The annual percentage rate (APR) adds fees charged when the loan is made, such as origination charges.
For your actual payment, enter the interest rate. The payment is worked out on it, so typing the APR instead overstates what you'll pay. For comparing offers, the APR is the better single number.
A fee pushes the APR up most on a short loan. Here's $10,000 at 11%, with a $500 fee taken out of the money you receive:
| $10,000 at 11%, $500 fee | Monthly payment | APR |
|---|---|---|
| 1 year | $883.82 | 20.83% |
| 2 years | $466.08 | 16.21% |
| 3 years | $327.39 | 14.58% |
| 5 years | $217.42 | 13.26% |
| 7 years | $171.22 | 12.69% |
The fee is the same $500 in every row. Repaid over one year, it lifts the APR from 11% to 20.83%. Over seven years, it adds less than two points.
So a no-fee loan at a slightly higher rate can be the cheaper deal, especially if you'll repay it fast. The APR calculator runs this for any fee and term.
How the results line up with your loan disclosure
For consumer installment loans, apart from most mortgages, federal Truth in Lending rules (Regulation Z) require a written disclosure. It has to use these exact terms. Here they are for the three-year loan above:
- Amount financed: the credit you actually receive. Regulation Z subtracts prepaid finance charges, so it's $9,500, not $10,000.
- Finance charge: the cost of the credit in dollars. Loan fees count, so it's $1,786 of interest plus the $500 fee, or $2,286.
- Annual percentage rate: that cost as a yearly rate, here 14.58%.
- Total of payments: what you'll have paid after all 36 payments of $327.39, which comes to $11,786.
Enter $10,000, 11% and three years here, and you'll get the same $327.39 and $11,786. The calculator's total interest leaves out the fee, so it sits $500 below the finance charge.
Two more lines deserve a look. The disclosure must say whether paying early can trigger a charge, and list any late-payment fee. Late fees aren't part of the finance charge, and the calculator assumes you're never late.
What an extra $100 a month is worth
In the calculator, every extra dollar comes straight off the balance, so it stops interest before it's charged. Here's a $20,000 loan at 9% over five years:
| Extra each month | Monthly payment | Paid off in | Total interest |
|---|---|---|---|
| $0 | $415.17 | 5 yr | $4,910 |
| $50 | $465.17 | 4 yr 5 mo | $4,235 |
| $100 | $515.17 | 3 yr 11 mo | $3,727 |
| $200 | $615.17 | 3 yr 2 mo | $3,011 |
An extra $100 a month clears the loan 13 months sooner and saves $1,183 in interest. Even $50 saves $675.
Check the prepayment line on your disclosure first. If a charge may apply, weigh it against the interest you'd save. The amortization calculator lays out every month's split between interest and principal.
Is your rate in the normal range?
The Federal Reserve surveys banks each quarter and averages each one's most common rate. For 24-month personal loans, that average was 11.86% in the survey taken in May 2026.
Your quote could land well above or below it. Higher credit scores generally bring lower rates, the CFPB says, but lenders needn't offer you their best rate. Its advice is to shop around and compare. The loan comparison calculator sets two offers side by side.
Fixed rate, on-time payments, whole years
The calculator assumes one fixed rate for the whole loan, twelve payments a year and no missed months. If your rate can move, rerun it a couple of points higher to see what a rise would cost.
Terms run in whole years, from 1 to 50. And the tool can't tell you whether the payment is affordable. The debt-to-income calculator shows what share of your gross income all your debt payments would take.
Sources
- CFPB, What is the difference between a loan interest rate and the APR? (last reviewed August 28, 2026)
- CFPB, Regulation Z, 12 CFR 1026.18: Content of disclosures (current version)
- CFPB, Regulation Z, 12 CFR 1026.4: Finance charge (current version)
- Federal Reserve, G.19 Consumer Credit, Terms of Credit (release of September 8, 2026)
- OpenStax (Rice University), Principles of Finance 2e, 8.3 Loan Amortization