You need three parameters:
- Principal: the amount borrowed.
- Annual percentage rate (assuming that additional charges have been added)
- Loan term: the period in which the loan will be repaid.
Then you use this formula:
M= P*R*(1+R)N
(1+R)N-1
Where
M is the monthly payment,
P is the principal,
R is APR/12 (since there are 12 months in a year), and
N is the loan term in months.
Possible Monthly Payments on a $15,000 Personal Loan
Here is an example of a $15k personal loan monthly payment calculation taking 15% as the APR.
| Loan term (months) | APR (%) | Total interest ($) | Monthly payment ($) |
| 12 | 15 | 1,246 | 1,354 |
| 24 | 15 | 2,455 | 727 |
| 36 | 15 | 3,719 | 520 |
| 48 | 15 | 5,038 | 417 |
| 60 | 15 | 6,411 | 357 |
| 72 | 15 | 7,837 | 317 |
| 84 | 15 | 9,314 | 289 |
Note that your monthly payment can vary as the annual percentage rate on a personal loan has a wide range of 3%-36%.
Personal loans usually span anywhere between one and seven years. Consumers usually prefer longer term loans as these incur lower monthly payments that are more affordable and easier to repay without default.
Nevertheless, longer repayment terms incur a higher total interest. Also, a longer repayment term typically means that you can’t easily get another loan for a longer period, as most lenders would not want to lend to someone that is still in debt.