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. A quote is usually stated as a monthly payment; the total interest paid over the term describes the same loan on a different basis. This calculator takes three inputs (principal, annual interest rate, and term in months) and returns five numbers: monthly payment, total paid across the loan life, total interest, total interest as a percentage of principal, and the interest charged in the first payment.

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 × i(1 + i)ⁿ ÷ ((1 + i)ⁿ − 1), where i is the monthly rate, produces a constant monthly payment under which this internal split rebalances over time. The calculator works in monthly units: the annual percentage is divided by 1,200 to give i, 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 ÷ 1,200 = 0.008333, or 0.833% a month. 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 but raises the total paid to roughly 19,122 and the total interest to about 4,122, or 27.5% of principal. At the 10% rate used here the longer term cuts the monthly figure by about a third while raising total interest by about 70%; both proportions shift with the rate, and at 40% the monthly cut is nearer a fifth while the interest rise is above 80%.

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 binds depends on what is constraining the borrower: the shorter term costs less in total, the longer term spreads a smaller amount across more months.

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 (often a small percentage 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.