{"id":25514,"date":"2023-01-09T14:00:23","date_gmt":"2023-01-09T19:00:23","guid":{"rendered":"https:\/\/www.avant.com\/blog\/?p=25514"},"modified":"2023-08-03T16:43:28","modified_gmt":"2023-08-03T21:43:28","slug":"personal-loan-calculator","status":"publish","type":"post","link":"https:\/\/www.avant.com\/blog\/borrow\/personal-loan-calculator\/","title":{"rendered":"Personal Loan Calculator"},"content":{"rendered":"

When it comes to loan repayment<\/a>, 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.<\/p>\n

Frequently asked questions about personal loan payments<\/h2>\n

What is the difference between APR and interest rate?<\/h3>\n

You\u2019ll see both an Annual Percentage Rate (\u201cAPR\u201d) 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<\/a>, there’s a difference between an APR and an interest rate<\/a>.<\/p>\n

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.<\/p>\n

How are personal loan payments calculated?<\/span><\/h3>\n

While Avant\u2019s personal loan monthly payment calculator does the work for you, it can be helpful to understand how your payments are calculated.<\/p>\n

For personal loans with fixed rates, like those through Avant, your monthly payment is calculated using three things.<\/p>\n

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  1. Total amount you borrow<\/strong>: This is easy. It\u2019s simply the amount of your loan.<\/li>\n
  2. Your APR<\/strong>. This is also simple as Avant loan agreements clearly indicate your APR.<\/li>\n
  3. Number of total loan payments<\/strong>: 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.<\/li>\n<\/ol>\n

    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.<\/p>\n

    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%.<\/p>\n

    Looking at the bigger picture, we can calculate how monthly personal loan payments are calculated.<\/p>\n