When it comes to loan repayment, nobody likes surprises. The personal loan payment calculator from Avant allows you to estimate monthly payments for the loan you need. Simply input the amount you want to borrow, how many months until repayment, and your estimated credit score to get a fast repayment estimate. Adjust the loan amount and terms to get an idea of what financing options may work best for you.
Frequently asked questions about personal loan payments
What is the difference between APR and interest rate?
You’ll see both an Annual Percentage Rate (“APR”) and an annual interest rate in your loan agreement when applying through Avant. Both are the cost of borrowing the money. While they are related terms, there’s a difference between an APR and an interest rate.
The interest rate is the percentage of the principal loan amount you are charged for borrowing the money, while the APR is the interest rate plus any additional administration or origination fees that cover the expenses the lender has for processing the loan. The APR is calculated as the percentage of the amount disbursed after any fee. Because the additional fees are factored into the APR, the APR is always a higher number than the interest rate.
How are personal loan payments calculated?
While Avant’s personal loan monthly payment calculator does the work for you, it can be helpful to understand how your payments are calculated.
For personal loans with fixed rates, like those through Avant, your monthly payment is calculated using three things.
- Total amount you borrow: This is easy. It’s simply the amount of your loan.
- Your APR. This is also simple as Avant loan agreements clearly indicate your APR.
- Number of total loan payments: To determine this, multiply your 12 monthly payments by the number of years you will make those payments. So, if you have a two-year loan, you would make 24 total payments.
It is important to keep in mind that Avant calculates APR on a daily accrual rather than a monthly accrual. The daily interest amount is calculated using the outstanding principal balance as of the beginning of a month and then the monthly interest payment is derived by adding the daily interest amount. Monthly interest payment can vary depending on the number of days in a month. For example, February (28 days) has fewer days when compared to January (31 days) and therefore would have a lower monthly interest payment. However, your total monthly loan payment remains the same amount every month. A portion of monthly payment will be applied towards the interest balance which equals the total daily accrued interest in that month and the rest is applied towards the principal balance. The distribution of that payment to interest and principal varies from month over month. In the initial months, the proportion of interest is higher in the monthly payment while in the later months the proportion of principal is higher.
Take, for example, a $20,000 personal loan at 15% APR that accrues daily for one year. The daily interest rate can be calculated by dividing the 15 (APR) by 365 (days in a year). This calculates a daily interest rate of 0.04%.
Looking at the bigger picture, we can calculate how monthly personal loan payments are calculated.
- $20,000 (loan) x 0.04% (daily interest rate) = $8.22 (daily accrued interest)
- $8.22 * 31 = $254.79 (First Month Interest)
- Second month’s interest will be $212.30 (a lower amount than first month because the principal balance has reduced in the second month)
- Total Interest Payment on a one year loan = $1654.42
- After year 1, the outstanding loan balance becomes 0.
- $20,000 (loan) + $1654.42 (total yearly interest) = $21,654.42 (total amount due)
- $21,654 (total amount due) ÷ 12 (months) = $1,804 (total monthly payment)
Unless math is your strong suit, this formula can be complex. If you’re ever unsure of your math, double-check it using the steps above.
Is there a difference between a personal loan and installment loan?
An installment loan is a type of personal loan that’s repaid with regularly scheduled payments (often fixed). All personal installment loans through Avant offer the convenience of fixed interest rates, so your monthly payments will never change.
Some lenders offer personal loans with variable interest rates. That means that the interest rate fluctuates over time depending on the current market interest rate. They’re harder to budget for, as you won’t know what your payment will be until you receive that month’s statement.
How does credit score affect my personal loan rates?
The credit score you have when you apply for a personal loan through Avant will influence the interest rate and monthly payments set for your loan. If you have a high score, you could receive a lower interest rate on your personal loan and therefore a lower monthly payment.
How do you calculate monthly interest on a personal loan?
You’ll make monthly payments on your loan, so you may be interested in understanding how much interest you will pay during any given month.
Take the annual percentage rate (APR) on your loan and divide that number by 365 to see the percentage of interest charged on a daily basis. Then, multiply that sum by the principal balance of your loan. The result will indicate how much interest you will pay on a daily basis for that loan balance. From there, multiply that amount by the number of days in that month, and you will see the amount of interest you will pay for that month’s loan payment.
For example, if your principal balance on your loan is $20,000 and your APR is 15%, you will pay $8.22 in interest per day. If that loan payment is due in January, which has 31 days, January’s loan payment will include $254.79 in interest with the rest going toward principal. If the monthly payment on this loan is $1805.17, then $254.79 will be applied towards Interest and rest $1550.38 will be applied towards principal. The Principal balance outstanding at the beginning of next month will then become $18,449.62 ($20,000 – $1550.38). For the month of February, the daily interest will be calculated by multiplying daily APR by outstanding amount at the beginning of February (.04%*$18,449.62) . The daily interest amount will then be multiplied by 28 days in February to get February Interest amount of $212.30
The calculation will look like this:
Divide your APR by 365: 0.15 ÷ 365 = 0.04%
Multiply that sum by the loan balance: 0.04% x $5000 = $8
Multiple that sum by the number of days for January: $8 x 31 = $248
Multiple that sum by the number of days for February: $7.58 x 28 = $212
While your payment on a fixed-rate personal loan will remain the same each month, as you pay down your loan, you will pay less interest. Your total monthly loan amount remains the same, but the distribution of that payment to interest and principal changes.
Additionally, Avant includes an origination fee for personal loans that is calculated into the APR. While the interest rate is the percentage of interest paid on a loan, the APR includes the interest rate, as well as other fees and expenses (such as the origination fee.)
Learn more about personal loans through Avant
Personal loans through Avant cater to many needs, including emergencies, debt consolidation, and home improvement. Use the Avant personal loan payment calculator to get an idea of loan amounts and repayment terms that fit your needs, then apply online with our easy process. With fixed payments, fast decisions and funding, and simple autopay options, you’ll have the peace of mind to enjoy what matters most. It’s the Avant way.
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Avant branded credit products are issued by WebBank.
Avant, LLC is a financial technology company, not a bank. Banking services are provided by Evolve Bank & Trust, Member FDIC.
*Avant loan amounts range from $2,000 to $35,000. APR ranges from 9.95% to 35.95%. Loan lengths range from 12 to 60 months. Administration fee up to 4.75%.
* If approved the actual loan amount, term, and APR amount of loan that a customer qualifies for may vary based on credit determination and state law. Minimum loan amounts vary by state.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.
†The decision process may take longer if additional documents are requested. Approval and loan terms will vary based on credit determination and state law.
‡ Funds from Avant are generally deposited via ACH for delivery next business day after approval if approved by 4:30pm CT Monday-Friday.
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