Personal Loan Comparison Calculator and Payment Formula

A personal loan comparison starts with putting each offer’s amount, APR, term, fees, and repayment schedule on the same basis. This calculator estimates a fixed-rate loan’s monthly payment and total interest from the amount, APR, and term; compare its results with each lender’s written disclosure, since fees and other terms are not modeled.

Formula

The calculator uses the standard amortizing-loan payment formula, with the monthly payment rounded to the nearest cent:

Monthly payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

Total interest = (monthly payment × n) − P

• P is the amount borrowed, in dollars.
• APR is the annual percentage rate entered as a percentage.
• r is the monthly rate, calculated as APR ÷ 1,200.
• n is the number of monthly payments, calculated as the term in years × 12.

The formula assumes a fixed rate and equal monthly payments. Its total-interest output uses the displayed, cent-rounded payment multiplied by the number of payments, then subtracts the principal. It is an estimate of loan arithmetic, not a comparison of complete contract costs.

Worked Example

Using the default inputs—$20,000 borrowed, 8% APR, and a five-year term—the calculation is:

1. Convert the annual rate to a monthly decimal: 8 ÷ 1,200 = 0.0066667.
2. Convert the term to payments: 5 × 12 = 60 months.
3. Substitute into the payment formula: $20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰] = $405.53 per month, rounded to cents.
4. Calculate total interest using the rounded payment: ($405.53 × 60) − $20,000 = $4,331.80.

The displayed figures are estimates based on the formula and its rounding; a lender’s payment schedule may differ if its terms include fees or other adjustments.

Assumptions

• The interest rate remains fixed throughout the term.
• Payments are equal, made monthly, and applied at the end of each monthly period.
• Interest is modeled monthly at APR ÷ 12; the APR is treated as the annual rate supplied by the user.
• Fees, taxes, insurance, and other charges are not included. No separate fee, payment-date, or rate-change inputs are provided.

How to Compare Personal Loan Offers

For a useful comparison, collect the same details for every offer rather than comparing a headline rate or monthly payment alone. Enter the amount you expect to borrow, the APR stated in the lender’s documents, and the repayment term. Then review the estimated payment and interest alongside the offer’s full disclosures.

• Amount received versus amount repaid: Check whether any fee is deducted before funds are disbursed or added to the balance. A borrower could receive less cash than the stated loan amount while still owing the full amount.
• APR and interest rate: These terms may not mean exactly the same thing in an offer. Read how the lender defines and calculates its APR, and whether the figure reflects fees. This calculator uses the APR entered as its annual rate and does not independently calculate fee-adjusted APR.
• Term: A longer term generally spreads repayment across more monthly payments. That can change the payment and the total interest; compare both figures, not just the monthly amount.
• Fees and conditions: Look for origination or other charges, late-payment terms, payment method requirements, and any charge or restriction related to early repayment. The calculator cannot evaluate contract terms.
• Rate structure: Confirm whether the stated rate is fixed or can change. This formula represents a fixed-rate loan, so it does not project changing payments.

For example, two offers can have the same principal and APR but different terms. The shorter-term offer will usually have a higher scheduled monthly payment and fewer payment periods; the longer-term offer can have a lower scheduled payment but more time for interest to accrue. The exact figures depend on the inputs and any contract charges.

What the Calculator Does Not Show

A monthly payment is only one part of a loan’s cost. This calculator has no input for fees, so its total-interest result is not the same as the total amount a borrower may pay under every contract. To compare total cash cost, use the lender’s disclosed payment schedule and add applicable charges without counting a fee twice. If a fee is withheld from the proceeds, distinguish the amount borrowed from the net amount received.

Rounding also matters. The formula rounds the monthly payment to cents and uses that rounded number to estimate total interest. A lender may calculate payments with different conventions or adjust the final installment to clear a small remaining balance. Treat small differences as a reason to check the disclosed schedule, not as evidence that either figure is universally exact.

Do not assume that a lower payment means a lower overall cost: a longer term can reduce the scheduled amount while increasing the number of payments. Conversely, a payment estimate alone does not establish whether an offer fits a person’s circumstances. The calculator does not assess income, expenses, eligibility, credit, or the terms of any specific offer.

Common Comparison Mistakes

• Comparing offers with different loan amounts or terms and attributing the payment difference only to APR.
• Using an advertised or illustrative rate rather than the rate and fees shown in the actual offer.
• Ignoring the net cash received when a fee is deducted from the loan proceeds.
• Comparing only monthly payments while overlooking the number of payments and total interest.
• Treating this estimate as a lender quote or assuming all lenders use identical payment and rounding conventions.

For a like-for-like calculation, use the same borrowing amount and enter each offer’s own APR and term separately. Then verify the results against the lender’s current written disclosure. If the disclosure uses a different APR definition or includes charges, the comparison needs those details to represent the full cost.

Frequently Asked Questions

How do I compare personal loan offers?
Compare the same borrowing amount across each offer, including APR, term, monthly payment, total repayment, fees, and rate structure. Use the written offer rather than an illustrative example and check how fees affect the funds received and the amount owed.

Does this calculator include personal loan fees?
No. It estimates payment and interest from the entered amount, APR, and term. It does not include origination fees or other charges, and it does not calculate a fee-adjusted APR.

Why can a longer loan term have a lower monthly payment?
A longer term divides repayment over more months. That can lower each scheduled payment, but interest may accrue over more payment periods. Compare the total cost as well as the monthly figure.

Is APR the same as the interest rate?
Not necessarily. APR may account for certain loan costs depending on how the offer defines it, while an interest rate describes the charge for borrowing. Check the lender’s disclosures and use the rate that matches the calculator’s assumptions.

Why does my lender’s payment differ from this estimate?
The lender may include fees, use different timing or rounding conventions, or adjust the final payment. Compare the calculator’s inputs and assumptions with the official payment schedule.

The result is an estimate, and the lender’s disclosure gives the exact figures.

Related

• Home Loan Comparison Calculator: Compare Payments
• Personal Loan Payment Calculator and Comparison Guide
• Home Equity Loan Comparison: Payments and Costs

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2