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The personal loan calculator is a simple tool that helps you calculate how much you will have to pay for your unsecured personal loan. To make reasonable financial decisions, you need to know what is the cost of the loan and how much you will have to pay each month to return your debt. Our simple loan payment calculator helps you estimate not only the amount of unsecured consumer loan monthly payments but also the total cost of the loan. It takes into account different interest rates and payback periods.
Read on to find out:

  • What is a personal loan;
  • Why people take out personal loans; and
  • How to calculate monthly payments on a personal loan.

If you are shopping around for personal loans, you may check our loan comparison calculator, which can give you excellent support in choosing the most favorable option. You can also check our personal loan EMI calculator, created especially for India.

What is a personal loan?

In general, a personal loan is every debt you take to finance your private spending. Among many types of personal loans, you can find loans for different products such as mortgages, unsecured personal loans, auto loans, overdrafts, and even ordinary credit cards. To learn more about how to pay off credit card debts, visit our credit card payoff calculator.

In everyday life, personal loans are usually identified as unsecured personal loans. This type of loan differs from mortgages because you do not need any collateral to apply for it. Also, the loan granting process is less complicated and shorter in the case of unsecured consumer loans. Another difference is the payback period length: mortgages could be as long as 30 years, while unsecured loans are usually much shorter.

The differences between unsecured consumer loans and other types of debts

The main difference between unsecured consumer loans and overdrafts or credit cards comes down to the granting period and how the interest rate is established. Unsecured loans allow you to borrow a certain amount of money over a fixed term and at a fixed interest rate.

In the 20th century, personal loans (unsecured consumer loans) were provided mainly by banks, credit unions, and pawnshops. In recent years, many online platforms offering P2P loan services have appeared. As they usually offer more favorable terms, they are gaining importance. Remember to look at their offers when you consider taking out a loan.

Why do people take out unsecured personal loans?

In fact, there are dozens of reasons why people take out personal loans. The most popular are cars and home renovations. A lot of people decide to borrow money for holidays or weddings. Sometimes it is necessary to use a personal loan to cover medical bills. You can use a personal loan to invest in your own business. You can also take a personal loan to consolidate other debts or finance one of your dreams.

The formula for monthly payment in personal loan calculator

If you want to know how to calculate the monthly payment of your personal loan, the equation is as follows:

Monthly_payment = (loan_amount) × (interest_rate / 12) / (1 - (1 + (interest_rate / 12)) ^ (- loan_term)).

In this formula, interest_rate should be given for a yearly period.

How to use the personal loan payment calculator

To use our simple loan calculator, start by filling in the "Loan amount" field. You should type in there the amount you want to borrow. Then choose the payback period ("Loan term"). It could be expressed in years or months.
In the third field, provide a yearly interest rate. (You don't know how to calculate annual interest on the basis of monthly or quarterly interest rates? Use our APY calculator.)
The result of the calculation will appear in the field "Monthly payment". This is the amount you will have to pay every month to repay your debt.

Do you think you cannot afford such an amount, or conversely – do you believe that you are able to pay higher installments? Try to raise your payback period. You can also change the initial debt amount or the interest rate. However, you need to remember that the interest rate depends on your bank or other institution which grants you a loan.
The amount in the field total interest paid shows the total cost of your loan within the whole period. Did you know that shortening the loan term always lowers the cost of your credit?

Let's try the personal loan payment calculator on a simple example.

  1. You are borrowing $1,000 to buy your dream TV set.
  2. The payback period (so the time when you have to repay your debt) is 2 years.
  3. Yearly interest rate is 5%.
  4. It means that according to the formula given above, you will have to repay $43.87 every month for the next two years.
  5. Two years is 24 months. So you will have 24 installments of $43.87 each. It gives the total amount repayable as $1,052.91.
  6. You borrow $1.000, so the total charge for your loan will be $1,052.91 – $1,000 = $52.91. Actually, it is the bank’s profit.

For further financial calculations, use our compound interest calculator. Do you want to be financially smart? Try our other personal finance calculators.

Tomasz Jedynak, PhD
Loan amount
Loan term
Interest rate
Monthly payment
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