Loan Payment Formula
M = P × [r(1+r)^n] / [(1+r)^n − 1]
Where M = monthly payment, P = principal, r = monthly rate, n = number of payments
Average Interest Rates by Loan Type (2026)
- Auto loan (new car): 5-8%
- Auto loan (used car): 7-12%
- Personal loan: 8-36% (depends on credit)
- Student loan (federal): 4.5-7.5%
- Student loan (private): 4-15%
- Business loan (SBA): 8-13%
Tips for Getting the Best Rate
- Check and improve your credit score before applying
- Compare offers from multiple lenders
- Consider credit unions — often 1-2% lower than banks
- Shorter terms = lower rates but higher monthly payments
- Make a larger down payment to reduce the loan amount