How to calculate loan payments with interest

6 October 2026 · Calcosmo editorial team

Borrow $10,000 at an APR of 8% over 60 months and you pay about $202.76 a month. In total you pay about $2,166 in interest. For your own amount, use the loan calculator.

The loan payment formula

A personal loan is an amortizing loan: you pay the same amount every month, partly interest and partly principal. The payment is:

payment = principal × i ÷ (1 − (1 + i)^−n)

Here n is the number of months and i the monthly rate. With a US-style APR, i = APR ÷ 12; at 8% that is 0.6667% per month.

Worked example: $10,000 over 60 months at 8% APR: 10,000 × 0.006667 ÷ (1 − 1.006667^−60) ≈ $202.76 per month. In the first month, $66.67 of that is interest and $136.09 goes to principal; by the end, almost the whole payment is principal.

Monthly payment by term ($10,000, 8% APR)

A longer term lowers your monthly payment, but you pay much more interest. At 84 months, the interest is more than three times as high as at 24 months.

Monthly payment by rate ($10,000, 60 months)

Each 2 percentage points add roughly $10 a month and $550 to $600 over the term.

Personal loan or credit card?

• Personal loan: fixed rate, fixed payment and a fixed term. After the last payment the loan is paid off. The tables above assume this.
• Credit card: rates are usually much higher (often 20% or more) and the minimum payment is a small percentage of the balance, so paying off $10,000 can take many years. Transferring card debt to a cheaper personal loan can save a lot of interest.

Tips to borrow for less

• Compare APRs. The APR includes the interest and most fees, so it is the fairest comparison. Read more in what APR means.
• Watch for origination fees. Some lenders deduct a fee of 1% to 8% from the amount you receive.
• Choose the shortest term you can comfortably afford.
• Improve your credit score before applying; it has a large effect on the rate you are offered.
• Check prepayment terms. Many lenders allow early repayment without a penalty.