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Calculate monthly loan payments, total interest, and see a full amortization schedule with our easy-to-use loan calculator.
Try describing your loan in plain English. For example: "Calculate a $450k loan over 30 years at 7.2%."
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$1.74T
Total consumer loan balances in the US (2024 Federal Reserve)
7.75%
Average personal loan APR for 24-month loans (2024, Fed)
36 months
Most common personal loan term in the US
1916
Year Morris Plan banks pioneered modern installment lending
A loan is a financial arrangement in which a lender provides a sum of money — the principal — to a borrower, who agrees to repay it with interest over a defined period. Interest compensates the lender for the time value of money and for credit risk.
Most consumer loans use amortization: each fixed monthly payment covers (1) the interest accrued on the outstanding balance and (2) a portion of the principal. Because interest is calculated on the remaining balance, early payments are heavily weighted toward interest. As the balance falls, each subsequent payment retires more principal — this is why the last few payments are almost entirely principal.
Loans can be secured (backed by collateral such as a car or home — lower APR) or unsecured (no collateral — higher APR). Rates can be fixed (locked for the entire term) or variable (tied to a benchmark like the Prime Rate, which means monthly payments can change).
Monthly Payment
M = P × [r(1+r)^n] ÷ [(1+r)^n − 1]where P = principal, r = monthly rate (APR ÷ 12), n = term in months
Total Interest
Total Interest = (M × n) − PRemaining Balance after month k
B_k = P × [(1+r)^n − (1+r)^k] ÷ [(1+r)^n − 1]| Loan Type | Typical APR | Term | Collateral | Best For |
|---|---|---|---|---|
| Personal (unsecured) | 11–25% | 2–7 years | None | Debt consolidation, large purchases |
| Auto Loan (secured) | 5–10% | 3–7 years | Vehicle | Car purchase |
| Home Equity (secured) | 7–10% | 5–30 years | Home | Home improvement, large expenses |
| Student Loan (federal) | 5.5–8.1% | 10–25 years | None | Education |
| Payday Loan | 300–400% APR | 2–4 weeks | None / Post-dated check | Avoid entirely |
| SBA Small Business | 7–13% | 5–25 years | Business assets | Business expansion |
1916
Morris Plan banks pioneer installment lending for working class Americans.
1934
FHA mortgage programs help standardize long-term amortizing loans.
1968
Truth in Lending Act (TILA) requires lenders to disclose APR clearly.
1978
Marquette National Bank ruling allows interstate interest rate exportation.
2006
LendingClub and Prosper launch peer-to-peer lending platforms.
2020
Digital lending grows 150%; fintechs approve 49% of all personal loans.
Non-revolving consumer credit (including personal and auto loans) reached $3.7 trillion in 2024. The average interest rate on 24-month personal loans was 12.35%.
federalreserve.gov →Personal loan originations hit 24.2 million in 2022 — a record high. Fintech lenders originated 49% of all personal loans. Average loan balance per borrower: $11,692.
transunion.com →The CFPB found that borrowers who compare 5+ lenders save an average of $1,700 over a 3-year loan term compared to borrowers who accept the first offer.
consumerfinance.gov →Myth
"The lowest monthly payment is always the best deal."
Fact
A lower monthly payment usually means a longer term, which dramatically increases total interest paid. A $25,000 loan at 8% for 3 years vs 7 years: monthly payment drops from $783 to $389, but total interest doubles from $3,188 to $7,676.
Myth
"Applying for multiple loans will destroy your credit score."
Fact
Credit bureaus treat multiple loan inquiries within a 14–45 day window as a single inquiry (rate shopping protection). Pre-qualification using soft pulls has zero score impact.
Myth
"Online lenders are less trustworthy than banks."
Fact
Many online lenders are FDIC-insured, publicly traded, or partnered with regulated banks. SoFi, LightStream, and Marcus are regulated financial institutions. Always verify NMLS registration.
Myth
"You should always pay off loans as fast as possible."
Fact
If your loan rate is 5% and you can earn 8–10% in index funds, mathematically it may be better to invest extra cash and make minimum loan payments. Evaluate the after-tax loan rate vs expected investment returns.
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