Installment Loan Calculator
An installment loan is repaid in equal monthly payments, each one interest on what is still owed plus a piece of the balance. Put in the amount, the rate and the months, add any origination or monthly fee, and see the payment, what the loan costs in all, and the APR with those fees counted, which is the figure to compare lenders on.
Installment loan payment and APR
Put in the loan as the lender quotes it. The APR here counts the fees as well as the interest, the way a Truth in Lending disclosure must.
- APR with the fees counted
- Last payment, trued up
- Cash in your hand
- Total of payments
- Interest
- Fees
- What the loan costs
Cash Interest Fees
Paying it off early
Assumes simple interest on the balance and no prepayment penalty: ask the lender, and read the contract's prepayment clause.
The payment schedule
| Payment | Amount | Interest | Principal | Fee | Balance |
|---|
How the payment is worked out
The level payment that clears a loan of P over n months at a monthly rate i is P × i ÷ (1 − (1 + i)−n), where i is the yearly rate divided by 12. Each month the interest is the rate on the balance still owed, and the rest of the payment pays the balance down, so early payments are mostly interest and late ones mostly principal. The calculator rounds the payment to the cent and trues up the last one, as a lender's schedule does.
$2,000 at 36% for 12 months is $200.92 a month: $2,411.09 in all, $411.09 of it interest. Stretch it to 24 months and the payment falls to $118.09, but the interest more than doubles, to $834.33.
| $2,000 for 12 months at | Monthly payment | Interest | Total repaid |
|---|---|---|---|
| 36% | $200.92 | $411.09 | $2,411.09 |
| 99% | $268.84 | $1,226.02 | $3,226.02 |
| 160% | $343.07 | $2,116.72 | $4,116.72 |
Why the APR with fees is higher than the rate
The interest rate only prices the interest. The annual percentage rate on a Truth in Lending disclosure prices the whole finance charge, fees included, against the money you actually get. Under Regulation Z it is the rate at which the payments, discounted month by month, add back up to the amount financed: the loan less any fee taken out of it. The calculator solves for that rate the way Appendix J describes.
Take the same $2,000 at 36% for 12 months with a $100 origination fee taken out of the cash. You receive $1,900 and still repay $2,411.09, so the loan costs $511.09 and its APR is 46.44%, not 36%. A fee added to the loan instead (you borrow $2,100 to get $2,000) comes to 45.92%.
A monthly fee weighs more on a short loan. Virginia's short-term loans allow 36% interest plus a monthly maintenance fee of 8% of the loan or $25, whichever is less: $500 over four months at the full fee is $159.51 a month, $138.05 in all on top of the $500, an APR of 126.23%. Ohio's allow 28% plus the lesser of 10% or $30 a month and a 2% origination fee from $500 up: $1,000 over four months is $294.75 a month and 93.94% APR.
Paying it off early
On a simple-interest loan, interest only runs on the balance, so paying it off early saves the interest the remaining payments would have carried. Pay the $2,000, 36%, 12-month loan off after the sixth payment and the payoff is about $1,088.46, saving $117.11. A fee already taken out of the loan is usually not refunded, and some contracts carry a prepayment penalty or use another method; the contract says which, and the state page names the rule where the state sets one.
State caps
Most states cap what a licensed lender may charge on an installment loan, often by tiers of the balance, and a few set no cap at all. Pick your state in the calculator for the short answer and a link to the full rules; installment loan laws by state has all of them on one page. Some examples from those pages:
- Texas sets Chapter 342 rate tiers, fee caps and term limits, and many high-cost loans are arranged through a credit access business instead.
- Virginia caps licensed installment loans at 36% interest, from $300 to $35,000 over 6 to 120 months.
- West Virginia caps them at 31%, 27% or 18% by loan size.
- Wisconsin sets no rate cap on licensed installment loans.
36% is a common line: the Military Lending Act caps consumer credit to service members and their dependents at 36% APR, and many state caps sit there or below. The calculator flags an APR above it.
If you are buying a home
An installment loan's payment goes into your debt-to-income ratio once the mortgage lender sees it: Fannie Mae counts installment debt with more than ten payments left. The DTI checker takes the payment from here and shows the effect, program by program. Will an installment loan hurt your mortgage approval, getting one while under contract and paying one off before you apply cover the timing.
Sources: 12 CFR 1026.22 and Appendix J (APR); 10 U.S.C. 987(b) (Military Lending Act); Fannie Mae Selling Guide B3-6-05; each state's cap from Rapid Loan's page on that state, which cites the statute. The figures are the calculator's own arithmetic on what you type; a lender's disclosure is the final word. General information, not financial advice.