Methodology

What every calculation assumes

All four calculators and the worked examples in our articles use the same loan model:

• a fixed APR for the whole loan;
• equal monthly payments;
• interest charged each month on the balance still owed;
• no fees, unless the page says a fee is included.

Amounts are in dollars, rates are yearly percentages and terms are in months. Payments are not rounded to the cent inside the math, so the balance reaches exactly zero. A lender rounds each payment and usually adjusts the last one, so its totals may differ from ours by a few cents.

Payment by loan size

Payment by loan size uses the standard amortization formula:

payment = P × r ÷ (1 − (1 + r)^−n)

P is the loan amount, r is the APR divided by 12 (as a decimal) and n is the number of monthly payments. Each month, the interest is the balance times r, and the rest of the payment reduces the balance. Total interest is the payment times n, minus P.

Worked example: $10,000 at 15% APR over 36 months gives a payment of $346.65 and total interest of $2,479.52. Interest is $1,309.30 in the first year, $851.06 in the second and $319.16 in the third.

The rings. Each ring stands for one year of the loan, counting outward from the center. A ring’s width is the principal repaid that year, so later rings are wider: in the example, $2,850.54 in year one and $3,840.68 in year three. The magenta arc on each ring shows that year’s interest as a share of that year’s payments: 31.5% in year one, 20.5% in year two and 7.7% in year three.

How much can I borrow

How much can I borrow starts from a debt-to-income (DTI) limit:

room for a new payment = DTI limit × gross monthly income − existing monthly debt payments

It then runs the payment formula backward to find the largest amount that payment repays at the APR and term you choose:

amount = payment × (1 − (1 + r)^−n) ÷ r

The result is rounded down to the nearest $100. If your existing payments already reach the limit, there is no room and the calculator says so.

Worked example: $6,000 gross monthly income, $1,900 in existing payments and a 36% limit leave room for a $260 payment. At 15% APR over 36 months, that repays about $7,500.

The 36% starting value is a common reference point, not any lender’s rule. Lenders set their own limits, count debts in their own way and look at much more than DTI.

Loan term comparison

Loan term comparison applies the payment formula to one amount at one APR across terms of 12, 24, 36, 48, 60, 72 and 84 months. It uses the same APR for every term on purpose, so the only thing that changes is the length. In practice, lenders often charge a different rate for a different term, and not every lender offers every term.

Worked example: $15,000 at 15% APR costs $1,353.87 a month over 12 months, with $1,246.50 in interest, and $289.45 a month over 84 months, with $9,313.91 in interest.

Amount to request

Amount to request handles an origination fee taken out of the loan. If the fee is a share f of the loan, you receive the loan times (1 − f). To end up with the cash you need:

loan to request = cash needed ÷ (1 − fee)

The calculator rounds the result up to the next whole dollar. The payment is computed on the full loan amount, because that is what you repay.

The APR with the fee. Because you receive less than you repay, the fee raises the APR above the interest rate. The calculator finds the APR at which the cash you actually receive would be repaid by the same monthly payment. There is no closed formula for that rate, so it is solved numerically, by narrowing the range until it is accurate to a tiny fraction of a percent. This follows the idea behind the actuarial method in Appendix J to Regulation Z, which lenders use for the APR on their disclosures.

Worked example: needing $9,500 in hand with a 5% fee means requesting $10,000. At a 14% interest rate over 36 months, the payment on $10,000 is $341.78, and the APR with the fee is about 17.65%.

Limits of every estimate

Results are estimates, not offers. They do not include late fees, optional add-ons such as credit insurance, variable rates, a first payment date that falls more or less than a month after the loan is made, or the fees and rate a particular lender would charge you. Calculator inputs are limited to ranges that make sense for personal loans, such as loan amounts from $500 to $100,000 in the payment and term calculators. The figures on a lender’s Truth in Lending disclosure are the ones that count.

Worked examples in articles

Articles quote example payments computed with the same formulas. Each example says its assumptions, for instance “15% APR over 36 months, no fees”. Income figures use the DTI formula above: income needed = (new payment + other debts) ÷ the DTI limit. Every example is recomputed whenever a page is updated.

Rates strip

The rates strip near the top of the page shows a few published benchmarks so you can see where the market stands. Each figure is entered by hand from its source, with the date of the reading next to it:

• the federal funds target range, from the Federal Reserve’s FOMC statements;
• the bank prime rate and 2-year and 5-year Treasury yields, from the Federal Reserve’s H.15 release, read through FRED at the Federal Reserve Bank of St. Louis;
• the average APR on 24-month personal loans at commercial banks and the average credit card APR on accounts that pay interest, from the Federal Reserve’s G.19 consumer credit release;
• the 12-month change in consumer prices, from the Bureau of Labor Statistics.

The G.19 personal loan figure is a quarterly simple average of the most common rate each reporting bank charges. Online lenders, credit unions and finance companies are not in it.

These figures are averages and policy rates, not offers, and not the rate you would get. We update them when a new reading is published and remove a row rather than leave an old figure in place. Each figure links to its source.

Headlines strip

The headlines strip shows the newest releases of three agencies: the Federal Reserve (monetary policy), the CFPB (newsroom) and the FTC (consumer protection). Lendarbor’s own server reads their public RSS feeds and keeps a copy for up to 30 minutes. Your browser contacts only lendarbor.com, and no personal information is sent to the agencies. The titles are the agencies’ own. If the feeds cannot be reached, the strip shows a dated list of recent releases summarized by us. What the news means for borrowers is covered in the briefing.

State rules

Lendarbor does not publish state-by-state pages. When an article mentions a state rule, such as a rate cap or a loan-size band, we read the statute or the state regulator’s page, link it, and note the date we checked it. Editorial policy describes how pages are reviewed and corrected.