- Monthly payment
- The fixed amount due each month that repays the loan in full by the end of the term, covering that month’s interest plus part of the principal. It depends on the loan amount, rate and term. For example, $25,000 at 9.5% over 5 years is about $525 a month. It does not include any fees billed separately.
- Principal
- The amount borrowed and still owed, not counting interest. Each payment reduces principal by whatever is left after that month’s interest. If an origination fee is deducted from the proceeds, the principal can be larger than the cash you actually receive.
- Interest rate
- The annual percentage the lender charges on the outstanding balance, before fees. This calculator divides it by 12 to get the monthly rate applied each month. A higher rate raises both the payment and the total interest. Personal loan rates depend heavily on credit history and income.
- Annual percentage rate (APR)
- The yearly cost of borrowing including interest and certain fees, such as an origination fee, expressed as one rate. Lenders must disclose it, which makes it the better figure for comparing offers. This calculator uses the interest rate you enter; if a loan carries fees, its APR will be higher than that rate.
- Loan term
- The number of years over which the loan is scheduled to be repaid in full. A longer term spreads principal over more payments, which lowers each payment but increases total interest, because the balance stays outstanding longer. A shorter term does the reverse: higher payments, less interest overall.
- Amortization
- Paying off a loan through equal scheduled payments that each cover that month’s interest plus part of the principal. Early payments are mostly interest because the balance is highest; as the balance falls, more of each payment goes to principal. By the last payment the balance reaches zero.
- Total interest
- The sum of all interest paid over the life of the loan if every payment is made on schedule — total payments minus the amount borrowed. It excludes fees. Paying extra toward principal, where the loan allows it without penalty, or choosing a shorter term reduces it.
- Origination fee
- A one-time charge some lenders collect for processing a loan, usually a percentage of the loan amount and often deducted from the funds you receive. It is not part of this calculator’s total cost, but it raises the APR. Borrowing $25,000 with a 5% fee deducted leaves $23,750 in hand.
- Prepayment penalty
- A fee some loans charge for paying off the balance early or paying extra principal. It offsets part of the interest savings from early payoff. Many personal loans have none, but the loan agreement states whether one applies and how it is calculated.