Simple Loan Calculator

Every fixed-rate loan uses the same formula to determine your monthly payment. The payment stays the same each month, but the split between principal and interest changes over time — a process called amortization.

• Early payments are interest-heavy — In the first years, most of your payment goes toward interest because the balance is at its highest. On a $20,000 loan at 10% over 5 years, about $167 of your first $425 payment goes to interest.
• Later payments are principal-heavy — As the balance shrinks, less interest accrues, and more of each payment goes toward reducing what you owe. By the final year, nearly all of your payment is principal.
• Extra payments accelerate the shift — Any additional amount you pay goes directly to principal, which reduces the balance faster and means less interest on every future payment. Even $25-50 extra per month can save hundreds or thousands over the loan.

Many lenders charge an origination fee for processing your loan application. This fee typically ranges from 1% to 8% of the loan amount and is either deducted from your loan proceeds or paid upfront at closing.

• Deducted from proceeds — The most common method. You borrow $20,000 but receive $19,000 after a 5% fee. You still repay the full $20,000 plus interest. This effectively raises your true borrowing cost.
• Paid upfront — You pay the fee separately at closing and receive the full loan amount. This is less common but means you're not paying interest on the fee amount.
• No-fee loans exist — Some lenders, especially credit unions, don't charge origination fees. Others bake the cost into a slightly higher interest rate. Compare total cost, not just the rate.

• Check your credit score first — Your score is the single biggest factor in the rate you'll be offered. Scores above 720 typically qualify for the lowest rates. If yours is below that, consider waiting and improving it before applying.
• Compare at least 3-5 lenders — Rates vary widely between banks, credit unions, and online lenders. Pre-qualification (soft pull) lets you compare without hurting your credit.
• Watch the APR, not just the rate — The APR includes fees and gives a truer picture of the loan's cost. A lower rate with high fees can cost more than a slightly higher rate with no fees.
• Choose the shortest term you can afford — A shorter term means higher payments but dramatically less total interest. Run the numbers in this calculator to find the sweet spot between affordable payments and minimum interest.
• Avoid prepayment penalties — Some lenders charge a fee for paying off your loan early. Always confirm there's no penalty before signing — you want the freedom to make extra payments or pay off early without additional cost.