One formula, every fixed-rate loan
Whether it's a car, a personal loan for a renovation, a fixed-rate student loan, or a small business term loan, the underlying math is identical: a fixed monthly payment, split between principal and interest, where interest is charged on whatever balance remains. Only the typical size, rate, and term change by loan type — a personal loan might run 2-7 years at a higher rate, while a mortgage runs 15-30 years at a lower one.
Example: a $15,000 personal loan at 9.5% over 4 years
| Item | Amount |
|---|---|
| Monthly payment | $376.85 |
| Payment 1 — interest | $118.75 |
| Payment 1 — principal | $258.10 |
| Balance after payment 1 | $14,741.90 |
| Total interest over 4 years | $3,088.66 |
| Total paid | $18,088.66 |
| Payoff date | January 2030 |
Notice the rate here (9.5%) is much higher than a typical mortgage rate, which is normal for unsecured personal loans — lenders charge more when there's no collateral backing the loan. For the full formula derivation and a mortgage-sized example, see the main amortization calculator.
Frequently asked questions
What types of loans can I use this for?
Any fixed-rate, fixed-term installment loan: personal loans, auto loans, student loans with a fixed rate, business term loans, and mortgages. The math is the same closed-form amortization formula regardless of what the loan is for — only the typical size, rate, and term differ by loan type.
Does this work for variable-rate or adjustable-rate loans?
Not directly for the full term, since the formula assumes one fixed rate for every remaining payment. For a variable-rate loan, use the current rate to see your payment and schedule under today's rate; you'd rerun the calculator with the new rate and remaining balance whenever the rate resets.
What's the difference between a personal loan and an installment loan?
A personal loan is a type of installment loan — installment loan is the broader category for any loan repaid in fixed, scheduled payments over time (as opposed to revolving credit like a credit card). Personal loans, auto loans, and most mortgages are all installment loans and all amortize the same way.
Can I compare two loan offers with this calculator?
Yes — run each offer's amount, rate, and term separately and compare the monthly payment and total interest side by side. The total interest figure is often more useful than the monthly payment alone for comparing offers, since a longer term can lower the payment while increasing the total interest paid.
Why is my total interest so much higher on a long-term loan?
Interest accrues on the outstanding balance every month, so the longer a large balance stays outstanding, the more total interest accumulates — even at the same rate. A longer term lowers the monthly payment but stretches out how long the balance stays high, which is why total interest can be dramatically higher over more years.