Compute the monthly payment, total interest, and full amortization schedule for any installment loan — personal, student, business, or home equity. Updated for 2026 lending rates.
Almost every U.S. installment loan uses the same amortization formula:
M = P × [ r(1 + r)n ] ÷ [ (1 + r)n − 1 ]
where M is the monthly payment, P is the principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments. The formula divides the loan into equal payments, with each payment covering all of the current month's interest plus a portion of principal. As the balance shrinks, the interest portion shrinks too, so a larger share of every payment goes toward principal — that's why an amortization schedule front-loads interest.
| Loan type | Typical APR (good credit) | Typical APR (fair credit) | Typical term |
|---|---|---|---|
| Personal loan (unsecured) | 7 – 12% | 15 – 25% | 2 – 7 yrs |
| Auto loan (new) | 5.5 – 7.5% | 10 – 15% | 3 – 7 yrs |
| Auto loan (used) | 6.5 – 9% | 12 – 18% | 3 – 6 yrs |
| Home equity loan | 7.5 – 9.5% | 9 – 12% | 5 – 20 yrs |
| Student loan (federal) | 6.5 – 8.0% | N/A (no credit check) | 10 – 25 yrs |
| Small business loan | 8 – 13% | 15 – 30% | 2 – 10 yrs |
A 3-year loan and a 6-year loan on the same $25,000 at 9.5% look very different:
Doubling the term from 3 to 6 years cuts the monthly payment by 43% but more than doubles the interest cost. If you can comfortably afford the shorter-term payment, you save real money.
Three rates show up in loan paperwork and they are not the same number:
A loan with a 7.0% interest rate but $1,500 in origination fees on a $25,000 balance has a higher APR than a 7.5% interest-rate loan with zero fees. Always shop on APR.
Secured loans are backed by collateral (a house for a mortgage, a vehicle for an auto loan, cash in a CD-secured loan). If you default, the lender can repossess the collateral, so rates are lower. Unsecured loans (most personal loans, credit cards, student loans) have no collateral; lenders charge higher rates to offset their risk.
Loans are powerful when the borrowed money creates more value than its cost. Borrowing at 7% to consolidate 22% credit card debt saves real interest. Borrowing at 6% for an MBA that doubles your salary is a positive return on capital. Borrowing at 9% to buy a depreciating asset (e.g. a non-essential car upgrade) is rarely a financial win.
M = P × r × (1 + r)n ÷ ((1 + r)n − 1), where M is the monthly payment, P is principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments.
The interest rate covers only the cost of borrowing the principal. APR includes the interest rate plus origination fees, points, and most required fees, rolled into one annual percentage. APR is the right comparison metric.
Most major lenders require a 660+ FICO for unsecured personal loans, with the best rates reserved for 740+. Some credit unions and online lenders accept 580–660 with higher rates.
Most modern personal, auto, and student loans permit penalty-free prepayment. Extra principal cuts total interest. Check your loan agreement for any prepayment penalty.
Yes, but it increases total interest. A $25,000 loan at 7% over 3 years costs $4,712 in interest; over 6 years it costs $9,402 — nearly double.
Secured loans are backed by collateral (house, car) and offer lower rates. Unsecured loans have no collateral and higher rates.
U.S. installment loans use simple interest on the outstanding balance. Each payment first covers current-month interest, then any remainder reduces principal.
It applies the standard federal-lending amortization formula. Real quotes may vary slightly due to fees, daily interest accrual, and timing of the first payment.
Disclaimer: ProCalcVerse calculators are educational tools and do not constitute lending advice. Consult a licensed loan officer or financial planner before signing any loan agreement.