Alice has over 15 years of experience in consumer lending and personal financial strategy, ensuring the accuracy and relevance of this calculator.
Use our **Personal Loan Monthly Payment Calculator** to quickly estimate your monthly installment, the total interest paid, and the total cost of the loan. Simply enter the principal loan amount, the annual interest rate (APR), and the loan term in years or months below.
Personal Loan Monthly Payment Calculator
What is a Personal Loan Monthly Payment?
A personal loan is a type of unsecured installment credit often used for debt consolidation, home improvements, or large purchases. The **monthly payment** is the fixed amount you pay to the lender each month until the loan is fully repaid. This payment covers both a portion of the **principal** (the original amount borrowed) and the **interest** (the cost of borrowing the money).
Understanding this payment is crucial for budgeting, as it directly impacts your monthly cash flow. The payment amount is determined by three main factors: the loan amount, the annual percentage rate (APR), and the total loan term.
How to Calculate a Personal Loan Payment (Example)
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Identify Your Variables
Assume you take out a \$15,000 loan for 4 years at an 8% APR. Thus, $P = 15,000$, $r = 0.08 / 12 \approx 0.00667$, and $n = 4 \times 12 = 48$ payments.
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Calculate the Monthly Payment (M)
Plug the values into the formula: $M = 15000 \cdot \frac{0.00667(1+0.00667)^{48}}{(1+0.00667)^{48} – 1}$. The resulting monthly payment is approximately **\$366.19**.
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Determine Total Interest Paid
Total payments will be $\$366.19 \times 48 = \$17,577.12$. Subtract the principal: $\$17,577.12 – \$15,000 = **\$2,577.12** in total interest paid.
Personal Loan Formula
The standard formula used for calculating the fixed monthly payment ($M$) of an amortizing loan is:
$$M = P \cdot \frac{r(1+r)^n}{(1+r)^n – 1}$$
Formula Source: Investopedia
- Formula Variables:
- $M$: **Monthly Payment** (What we are solving for)
- $P$: **Principal Loan Amount** (The amount borrowed)
- $r$: **Monthly Interest Rate** (Annual Rate / 12 / 100)
- $n$: **Total Number of Payments** (Loan Term in Years × 12)
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Frequently Asked Questions (FAQ)
A: For a standard fixed-rate personal loan, the monthly payment remains the same for the entire loan term. The *proportion* of interest vs. principal in each payment changes, but the total payment is fixed.
Q: What is the difference between Interest Rate and APR?A: The **Interest Rate** is the cost to borrow the principal. The **APR (Annual Percentage Rate)** includes the interest rate PLUS any other fees (like origination fees), making it the more accurate measure of the total annual cost of the loan.
Q: Can I pay off my personal loan early?A: Most personal loans allow early payoff without penalty, which saves you a significant amount of money on future interest. Always check your loan agreement for any prepayment penalties.