1. What is the Personal Loan Calculator?

The Personal Loan Calculator estimates your monthly payment, total interest, and total cost of a personal loan using standard amortization formulas similar to those used by Bankrate.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( Principal \) — Original loan amount
• \( r \) — Monthly interest rate (APR divided by 12)
• \( n \) — Total number of payments (loan term in months)

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that pays off both principal and interest.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with budgeting and comparing loan offers. The total interest calculation shows the true cost of borrowing.

4. Using the Calculator

Tips: Enter the loan amount, APR (annual percentage rate), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and interest rate?
A: APR includes both interest rate and any fees, giving a more complete picture of loan cost.

Q2: How does loan term affect payments?
A: Longer terms mean lower monthly payments but higher total interest paid over the life of the loan.

Q3: Are there any loans this doesn't work for?
A: This works for standard fixed-rate loans. Adjustable-rate loans or loans with balloon payments require different calculations.

Q4: Why is my actual payment slightly different?
A: Lenders may use slightly different rounding methods or have small fees not accounted for here.

Q5: How can I pay less interest?
A: Choose a shorter loan term or make additional principal payments when possible.