Personal Loan Calculator Formula

Understand the math behind the personal loan calculator. Each variable explained with a worked example.

Use the Personal Loan Calculator

Formulas Used

Monthly Payment

monthly_payment = monthly_rate > 0 ? loan_amount * monthly_rate * pow(1 + monthly_rate, num_payments) / (pow(1 + monthly_rate, num_payments) - 1) : loan_amount / num_payments

Total Repaid

total_paid = monthly_payment * num_payments

Total Interest

total_interest = total_paid - loan_amount

Variables

VariableDescriptionDefault
loan_amountLoan Amount(USD)10000
annual_rateInterest Rate (APR)(%)10
loan_term_yearsLoan Term(years)3
monthly_rateDerived value= annual_rate / 12 / 100calculated
num_paymentsDerived value= loan_term_years * 12calculated

How It Works

Personal Loan Formula

Uses the standard amortization formula:

M = P × [r(1+r)^n] / [(1+r)^n - 1]

Worked Example

$10,000 personal loan at 10% APR for 3 years.

loan_amount = 10000annual_rate = 10loan_term_years = 3
  1. 01Monthly rate = 10% / 12 = 0.833%
  2. 02Payments = 3 × 12 = 36
  3. 03Monthly payment = $322.67
  4. 04Total repaid = $322.67 × 36 = $11,616
  5. 05Total interest = $11,616 - $10,000 = $1,616

Ready to run the numbers?

Open Personal Loan Calculator