Personal Loan Calculator
A personal loan calculator is an automated tool that helps users determine the financial implications of taking out a personal loan. By entering information about the loan amount, interest rate, and loan term, users can estimate their monthly payments, total interest costs, and amortization schedule.
- Unsecured Personal Loan: Used for various personal expenses without requiring collateral
- Secured Personal Loan: Requires collateral such as a car or savings account to secure the loan
- Debt Consolidation Loan: Combines multiple debts into a single loan with one monthly payment
Unsecured Personal Loan: Paying Back a Fixed Amount Periodically
Use this calculator for basic calculations of personal loans, or click the links for more detail on each.
Secured Personal Loan: Paying Back a Lump Sum Due at Loan Maturity
Debt Consolidation Loan: Predetermined Amount Due at Loan Maturity
Use this calculator to compute the initial value of a debt consolidation loan based on a predetermined face value to be paid back at loan maturity.
Unsecured Personal Loan: Fixed Amount Paid Periodically
Unsecured personal loans are used for various personal expenses without requiring collateral. Routine payments are made on principal and interest until the loan reaches maturity (is entirely paid off). Some common uses for unsecured personal loans include debt consolidation, home improvements, medical expenses, and major purchases. Below are links to calculators related to loans that fall under this category, which can provide more information or allow specific calculations involving each type of loan.
| Debt Consolidation Calculator | Home Improvement Loan Calculator |
| Medical Loan Calculator | Wedding Loan Calculator |
| Vacation Loan Calculator | Emergency Loan Calculator |
Secured Personal Loan: Single Lump Sum Due at Loan Maturity
Secured personal loans require collateral such as a car or savings account to secure the loan. Unlike the first calculation, which is amortized with payments spread uniformly over their lifetimes, these loans have a single, large lump sum due at maturity. Some loans can also have smaller routine payments during their lifetimes, but this calculation only works for loans with a single payment of all principal and interest due at maturity.
Debt Consolidation Loan: Predetermined Lump Sum Paid at Loan Maturity
Debt consolidation loans combine multiple debts into a single loan with one monthly payment. The face, or par value of a debt consolidation loan, is the amount paid by the borrower when the loan matures. Debt consolidation loans are typically structured as zero-coupon loans where borrowers receive funds at a discount to their face value, then pay the face value when the loan matures.
Personal Loan Basics for Borrowers
Interest Rate
Personal loan interest rates are influenced by factors such as credit score, income, and debt-to-income ratio. Interest rate is the percentage of a loan paid by borrowers to lenders. For most personal loans, interest is paid in addition to principal repayment. Personal loan interest is usually expressed in APR, or annual percentage rate, which includes both interest and fees.
Compounding Frequency
Compound interest is interest that is earned not only on the initial principal but also on accumulated interest from previous periods. Generally, the more frequently compounding occurs, the higher the total amount due on the loan. In most personal loans, compounding occurs monthly.
Loan Term
A personal loan term is the duration of the loan, given that required minimum payments are made each month. The term of the loan can affect the structure of the loan in many ways. Generally, the longer the term, the more interest will be accrued over time, raising the total cost of the loan for borrowers, but reducing the periodic payments.
Types of Personal Loans
There are several types of personal loans available to consumers.
Unsecured Personal Loans
Unsecured personal loans do not require collateral and are offered based on the borrower's creditworthiness. These loans typically require a higher credit score and lower debt-to-income ratio than secured loans. Unsecured personal loans generally have a higher chance of approval for borrowers with strong credit and stable income.
Secured Personal Loans
Secured personal loans require collateral such as a car, savings account, or other valuable asset to secure the loan. These loans reduce the risk for lenders by providing assets that can be seized if the borrower defaults. Secured personal loans typically feature more lenient qualification requirements than unsecured loans.
- Character—includes credit history, employment stability, and financial responsibility
- Capacity—measures a borrower's ability to repay a loan using income and expense analysis
- Capital—refers to the borrower's available assets and down payment funds
- Collateral—the asset being used to secure the loan
- Conditions—the current state of the economy and lending market
Secured personal loans typically feature competitive interest rates and higher loan amounts. Lenders may sometimes require a lien on the collateral for secured loans.
If borrowers do not repay their secured personal loans, lenders may repossess the collateral. Secured personal loans generally feature lower interest rates than unsecured personal loans because the collateral serves as protection for the lender.
Examples of secured personal loans include auto title loans, home equity loans, and savings-secured loans.