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Loan Payment Calculator
Before signing any loan, know exactly what it will cost you. Enter the loan amount, interest rate, and term to see your monthly payment, total interest, and get a Worth It Score based on your loan's true cost.
Sources & Methodology
By Sean Baldwin · Last reviewed July 2026
Frequently Asked Questions
How is a loan monthly payment calculated?
Your monthly payment is calculated using the loan amount, interest rate, and term. The formula accounts for compound interest so that each payment covers both interest and principal, with more going to principal over time as the balance decreases.
What is a good interest rate for a personal loan in 2026?
A good personal loan rate in 2026 is generally below 12% APR. Excellent credit (750+) can qualify for rates of 6-10%. Average credit (650-700) typically sees 12-20%. Anything above 25% should be a red flag, consider improving your credit first.
Is it better to get a shorter or longer loan term?
Shorter terms save money on interest but have higher monthly payments. Longer terms lower monthly payments but cost significantly more in total interest. Rule of thumb: choose the shortest term where the monthly payment fits comfortably in your budget.
Should I pay off my loan early?
Usually yes, if there is no prepayment penalty. Paying extra each month goes directly to principal, reducing the total interest paid. Even an extra $50/month on a $15,000 loan can save hundreds in interest and cut months off the term.
How loan payments are calculated
Every fixed-rate loan payment is calculated using an amortization formula that factors in your principal, interest rate, and loan term. In the early months, most of your payment goes to interest, on a $20,000 car loan at 7% for 60 months, your first payment of $396 goes roughly $117 to interest and $279 to principal. By month 50, that same $396 payment is nearly all principal. This is why paying extra on a loan early has a dramatically larger impact than paying extra later: you eliminate more future interest payments. Even one extra payment per year on a 5-year loan can cut weeks off the payoff date and save hundreds in interest.
APR vs. interest rate, why they're different and which matters more
The interest rate is the annual cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus most fees, origination fees, closing costs, points, expressed as an annual percentage. APR is almost always higher than the stated interest rate. For comparison shopping, APR is the more useful number because it captures the true annual cost. However, on short-term loans, fees matter more in absolute dollars than as a percentage. Always compare APR across lenders for the same loan type and term to get an apples-to-apples comparison.
How your credit score affects your loan rate
For most loan types, your credit score is the single biggest factor in the rate you receive. On a $20,000 auto loan for 60 months, the difference between a 720 score (about 6% APR) and a 580 score (about 14% APR) is roughly $85/month, and $5,100 in total interest paid over the life of the loan. Before taking out any significant loan, it's worth spending 3–6 months improving your credit score: pay all bills on time, get utilization below 30%, and avoid new credit applications. A few months of patience can save thousands.
When to choose a shorter vs. longer loan term
A longer loan term means lower monthly payments but significantly more total interest paid. A shorter term means higher payments but far less interest and faster debt freedom. On a $30,000 personal loan at 9%: a 36-month term costs $954/month and $4,344 in total interest. A 60-month term costs $623/month but $7,380 in total interest, $3,036 more. The right choice depends on your cash flow needs. If the longer term lets you invest the payment difference at a rate higher than your loan APR, it can make mathematical sense. Otherwise, shorter is almost always better.
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Further Reading
How We Calculate Your Score
The Worth It Score is based on the ratio of total interest paid to the original loan amount. A low ratio means you are borrowing efficiently — short term, low rate, or both. A high ratio means interest costs are substantial relative to what you borrowed. This is the single clearest signal of whether a loan is costing you too much.
- · Interest-to-principal ratio under 5% → 92
- · Ratio under 10% → 82
- · Ratio under 20% → 70
- · Ratio under 35% → 55
- · Ratio under 50% → 40
- · Ratio under 75% → 28
- · Ratio 75% or more → 15
Monthly payment is calculated using the standard amortization formula: M = P[r(1+r)^n]/[(1+r)^n-1], where P is principal, r is monthly interest rate, and n is number of payments. A score below 31 is a signal to compare lenders, shorten the term, or improve your credit score before borrowing.
Cite this calculator: Worth It Calculators, "What Will This Loan Really Cost You Before You Sign? (2026)," worthitcalculators.com/loan-payment/ (updated July 2026).