Calculate your monthly payment, total interest, and see a full amortization schedule. Works for personal, auto, student, and business loans.
| Period | Payment | Principal | Interest | Balance |
|---|
Personal loans are unsecured loans — meaning they don't require collateral — typically used for debt consolidation, home improvements, medical expenses, or major purchases. Loan amounts generally range from $1,000 to $100,000 with terms of 1–7 years. Because they're unsecured, interest rates tend to be higher than secured loans, typically ranging from 6% to 36% APR depending on creditworthiness. Your credit score, income, and debt-to-income ratio are the primary factors lenders evaluate.
Auto loans are secured loans where the vehicle itself serves as collateral. This security reduces lender risk, resulting in lower interest rates than personal loans — typically 3% to 15% APR for new vehicles and slightly higher for used cars. Loan terms commonly range from 24 to 84 months, though financial advisors generally recommend keeping auto loan terms at 60 months or less to avoid being "underwater" (owing more than the car is worth). A down payment of 20% or more can significantly reduce your monthly payment and total interest.
Student loans come in two main categories: federal and private. Federal student loans offer fixed rates set by Congress (currently 5%–8% for undergraduate loans), income-driven repayment plans, deferment options, and potential loan forgiveness programs. Private student loans are issued by banks and credit unions at variable or fixed rates based on your credit history. Standard repayment term is 10 years, but extended plans (up to 25 years) and income-driven plans can lower monthly payments at the cost of more total interest paid.
Business loans fund operations, equipment, real estate, or expansion. SBA loans (backed by the Small Business Administration) offer competitive rates (currently 6.5%–10%) with longer terms. Traditional bank loans may require 2+ years in business and strong financials. Online business lenders offer faster approval with higher rates (10%–80% APR for some products). Equipment loans, lines of credit, and invoice financing are specialized products each suited to different cash flow needs.
Mortgage loans are long-term secured loans used to purchase real estate, typically spanning 15 or 30 years. They carry the lowest interest rates of any loan type (often 6%–8% in 2024–2025 rate environments) because real property provides strong collateral. Fixed-rate mortgages maintain the same interest rate for the life of the loan, while adjustable-rate mortgages (ARMs) start lower but fluctuate with market indices after an initial fixed period. Due to the large principal and long term, even a 0.5% difference in rate can mean tens of thousands of dollars over the loan's life.
The interest rate is the base cost of borrowing money, expressed as an annual percentage. The APR (Annual Percentage Rate) includes the interest rate plus all additional costs: origination fees, broker fees, points, mortgage insurance, and certain closing costs. As a result, APR is always equal to or higher than the interest rate.
When comparing loan offers, always compare APR rather than just the interest rate. A loan with a lower interest rate but high fees may actually cost more than a loan with a slightly higher rate but minimal fees. Lenders are required by law (Truth in Lending Act) to disclose APR.
Pro Tip: For a $20,000 loan at 8% APR vs. 8.5% APR over 5 years, the difference is about $275 in total interest. Origination fees of $400 could easily offset that benefit — always calculate the all-in cost using APR.
Most installment loans (personal, auto, student) use simple interest, calculated only on the outstanding principal balance. Each month, interest accrues on what you still owe. As you pay down the principal, less interest accrues — this is the basis of amortization.
Compound interest accrues on both principal and previously accumulated interest. Credit cards typically use compound interest, which is why carrying a balance becomes expensive quickly. A $5,000 credit card balance at 24% APR compounds monthly, meaning you'd owe $5,100 after just one month without payment — and that $100 now earns interest the next month too.
For mortgages, student loans, and most personal loans, simple interest works in your favor: every principal payment you make reduces the base on which future interest is calculated. This is why extra payments have such a powerful effect on long-term costs.
Amortization is the process of spreading loan payments over time so that each payment covers both interest and principal. The key characteristic of amortizing loans is that while your monthly payment stays constant, the split between principal and interest shifts over time.
In the early months of a loan, the vast majority of your payment goes toward interest because the balance is highest. For example, on a $30,000 student loan at 5.5% over 10 years, your first payment of approximately $325 breaks down as roughly $138 interest and $187 principal. By the final payment, only about $1.50 goes to interest and the rest pays off the remaining principal.
This structure has an important implication: making extra payments in the early years of a loan has the biggest impact. Because you're reducing principal faster, less interest accrues each subsequent month, creating a compounding savings effect.
Refinancing means taking out a new loan to pay off your existing one — typically to secure a lower interest rate, reduce monthly payments, or change the loan term. The decision should be based on a clear break-even analysis.
Break-even formula: Total refinancing costs ÷ Monthly savings = Months to break even. If you plan to keep the loan longer than the break-even period, refinancing likely makes financial sense.
Refinancing makes the most sense when: (1) rates have dropped at least 1–2% since you originally borrowed; (2) your credit score has improved significantly, qualifying you for better terms; (3) you have substantial remaining term — refinancing in the final 1–2 years rarely saves money; (4) you can roll closing costs into the new loan or afford them upfront.
Be cautious about refinancing to a longer term to lower monthly payments — you may pay significantly more in total interest even at a lower rate.
Your loan behavior has a substantial impact on your credit score across multiple dimensions:
Credit Strategy: If you're planning a major purchase that requires financing (like a home), avoid applying for any new credit for 6–12 months beforehand. Even a small score drop from a new loan inquiry could affect your mortgage rate and cost thousands.
The monthly payment formula used by this calculator is the standard amortization formula:
M = P × [r(1+r)^n] / [(1+r)^n – 1]
Where: M = monthly payment, P = principal loan amount, r = monthly interest rate (annual rate ÷ 12 ÷ 100), n = total number of payments (months).
For a $10,000 loan at 7.5% APR over 36 months: r = 0.075/12 = 0.00625, n = 36. Monthly payment = 10,000 × [0.00625 × (1.00625)^36] / [(1.00625)^36 – 1] ≈ $311.07.
Build saving habits, track debt payoff milestones, and stay on top of your financial goals with Brite's free habit tracker.
Download Brite Free