Borrowing $25,000 at 7.5% APR for 5 years — the calculator's defaults — costs $500.95 a month, or $30,057 in total, of which $5,057 is interest. A fixed-rate loan payment is the level monthly amount that pays all interest due and retires the full principal by the final month, and it depends on only three inputs: the amount borrowed, the APR, and the term.
Your 7.5% is below the average 2-year personal loan APR of 11.4%. Federal Reserve G.19, as of Q1 2026.
Suppose you put the default values into Loan Calculator:
Plug those into the formula M = P · [r(1+r)^n] / [(1+r)^n − 1] and the result is:
With the defaults, the monthly rate is 7.5% / 12 = 0.625% and there are 60 payments. The amortization formula gives $500.95 per month. Over five years that is $30,056.92 paid on a $25,000 loan, so the borrowing itself costs $5,056.92 in interest — about 20% of the amount borrowed.
| APR | Monthly payment | Total interest |
|---|---|---|
| 5% | $471.78 | $3,307 |
| 6% | $483.32 | $3,999 |
| 7% | $495.03 | $4,702 |
| 8% | $506.91 | $5,415 |
| 9% | $518.96 | $6,138 |
This calculator uses the standard amortization formula for installment loans — the same equation lenders use for personal, student, and most consumer loans, and the method the CFPB describes for fixed-rate lending. The APR is treated as a nominal annual rate divided by 12 to get a monthly rate, and the payment is solved so the balance reaches exactly zero after the last payment. Total interest is the payment times the number of payments minus the principal. Origination fees, insurance add-ons, and variable-rate behavior are deliberately excluded, so the result is the pure cost of borrowing at a fixed rate.
References: CFPB methodology.
Last reviewed July 2, 2026 · Editorial policy