# Calculating Interest on a Personal Loan

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

*how is interest calculated on a personal loan?*Before taking out a loan, it’s helpful to know the answer to that question and understand how personal loan interest is calculated. That way you’ll know exactly how much interest you’ll pay over the life of the loan, as well as the total amount you’ll pay.

## What Is Interest on a Personal Loan?

## Types of Interest on a Personal Loan

### Simple Interest on Personal Loans

### Amortizing Interest on Personal Loans

## How Is Personal Loan Interest Calculated?

## Simple Interest Formula

## Amortized Interest Formula

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**What the Rule of 78 Is & How to Calculate It**## Why It's Important to Know How Personal Interest is Calculated

## The Takeaway

### Frequently Asked Questions

### About the Author

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