1. What is a Personal Loan Calculator?

This calculator helps you determine the monthly payment for a 5-year (60 month) personal loan based on the principal amount and annual interest rate (APR).

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( Principal \) — Original loan amount
• \( r \) — Monthly interest rate (APR/12)
• \( 60 \) — Number of monthly payments (5 years)

Explanation: The formula calculates the fixed monthly payment required to pay off the loan over 60 months, including interest.

3. Understanding Loan Payments

Details: Each payment consists of both principal and interest. Early payments have a higher interest component, while later payments have more principal.

4. Using the Calculator

Tips: Enter the loan amount and annual interest rate (APR). The calculator will show monthly payment, total repayment amount, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and interest rate?
A: APR includes both interest rate and any loan fees, representing the true annual cost of borrowing.

Q2: Can I pay off the loan early?
A: Most lenders allow early repayment, but some may charge prepayment penalties - check your loan terms.

Q3: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest.

Q4: What credit score is needed for a personal loan?
A: Most lenders require a score of at least 600, with better rates for scores above 700.

Q5: Are there fees not included in this calculation?
A: Some loans have origination fees (1-8% of loan amount) which would increase the effective cost.