Installment Loan Calculator
Enter the amount, the APR and the number of months. You get the monthly payment, the total you repay and the total interest, from the same amortization formula the lender uses, plus what a two-week payday loan rolled over for the same stretch would cost.
How the Installment Loan Calculator Works
An installment loan has three moving parts: the amount, the APR and the number of monthly payments. The lender runs them through the standard amortization formula, the same one behind a car loan or a mortgage, and gets a fixed payment that clears the balance on the last month. The calculator does exactly that. Enter the three figures from the offer and it returns the payment, the total you hand back and the slice of that total that is interest.
The formula: payment = P x r / (1 - (1 + r)-n), where P is the amount, r is the monthly rate (APR divided by 12) and n is the number of months. Each payment covers that month's interest on what is still owed, and the rest reduces the balance. Early payments are mostly interest; later ones are mostly principal. Total interest is the payment times the number of months, minus what you borrowed.
The Worked Example, Step by Step
Take $2,000 at 36% APR over 12 months, the default in the calculator and one of the representative examples in our footer.
- Monthly rate: 0.36 / 12 = 0.03.
- (1.03)12 = 1.42576, so (1.03)-12 = 1 / 1.42576 = 0.70138.
- 1 - 0.70138 = 0.29862.
- P x r = 2,000 x 0.03 = 60.
- 60 / 0.29862 = 200.92. That is the monthly payment.
Twelve payments at the unrounded figure ($200.9243) come to $2,411.09, so the interest is $411.09. On a real statement the payment is rounded to $200.92, twelve of those add up to $2,411.04, and the lender collects the missing five cents in the final payment. Close enough that nobody notices, which is why it is worth showing here.
Now the comparison line. A payday loan at $15 per $100 charges $300 per two-week term on $2,000. Twelve months is 365 days, and 365 / 14 = 26.07, so covering the same stretch takes 26 terms. 26 x $300 = $7,800 in fees, and at the end you still owe the $2,000. The installment loan cost $411.09 and the balance is zero. Most states cap payday loans at $500 to $1,000, so a $2,000 payday loan may not exist where you live. The line is there to show the price per dollar, not to suggest anyone plans to do this. Some borrowers do it anyway, one rollover at a time.
Term Length Changes the Payment More Than the Rate Does
| Loan | Monthly payment | Total repaid | Total interest |
|---|---|---|---|
| $2,000, 36% APR, 6 months | $369.20 | $2,215.17 | $215.17 |
| $2,000, 36% APR, 12 months | $200.92 | $2,411.09 | $411.09 |
| $2,000, 36% APR, 24 months | $118.09 | $2,834.28 | $834.28 |
| $500, 180% APR, 3 months | $218.99 | $656.97 | $156.97 |
Stretching $2,000 from 12 to 24 months drops the payment by $82.83 a month and adds $423.19 in interest. That trade is fine if the shorter payment would have bounced. It is expensive if you could have managed $200.92. The last row is what a typical online installment loan looks like in a state without a rate cap. 180% APR sounds outrageous, and it is, but three payments of $218.99 on $500 is still cheaper than rolling a $75 payday fee over twice ($225 in fees, $500 still owed).
Frequently Asked Questions
Which APR do I enter?
The one printed on the offer. Regulation Z requires every lender to disclose the APR and the finance charge before you sign, and that APR already folds in any origination fee. If a lender quotes only a monthly rate, multiply it by 12. If it quotes an interest rate plus a separate fee, the interest figure here will understate the true cost by that fee.
Why is my lender's payment a few cents different?
Rounding and day counts. Some lenders compute interest daily on a 365 or 360 day year and count the actual days between payments, so a first period of 33 days costs slightly more than one of 30. The formula here assumes twelve equal months, which is what the amortization schedule in most agreements is built on.
Does paying early save interest?
On a simple-interest installment loan, yes. Interest accrues on the balance still owed, so an extra payment cuts every future month's interest. Regulation Z requires the agreement to state whether there is a prepayment penalty; most small-dollar installment loans in capped states have none, but check the line before you pay ahead.
Is 36% a good rate?
It is the ceiling in the states that cap small loans, and the ceiling under the Military Lending Act for service members. Credit unions and banks often lend well under it. Online installment lenders in uncapped states are often far above it, 100% to 200% APR and beyond. The state pages list the cap where you live.
How does the payday comparison line work?
It counts how many two-week terms fit in your loan's months (12 months is 365 days, 365 / 14 = 26.07, so 26 terms), charges $15 per $100 for each, and adds them up. The principal is not repaid in that scenario, which is the whole point of the comparison.
