Learn the formula. The formula is 'I=(P*r*t)+P'. 'I' is the interest. 'P' is the principal. 'r' is the rate per year. 't' is the term. The term can be in months, semi annual periods or years, but ultimately it is the number of times interest is calculated.
Determine the variable data. For purposes of this example, we will start with a principal of $1000, an interest rate of 5% and a 7 year term. Here is the scenario; Tommy wants to give a personal loan $1000 to Jane at a rate of 5% under an agreement that it must be paid off in seven years.
Multiply the Principal times the rate times the term. That is $1000 times 5% times 7 years. This comes to $350 (1000 * 5%= $50 and $50 * 7 years = $350). Jan will owe Tommy an additional $350 in interest for the personal loan on top of the money lent.
Add the principal back to the interest to get the total loan amount including interest and principal. For this example, that comes to $1350. The total amount of money that Jane must pay Tommy in seven years for the personal loan is $1350.
If you want to then break up the personal loan into monthly payments you can do this by determining the amount of months. This is 7 years times 12 months per year which comes to 84 months. Then you divide the total loan amount of $1350 by 84 to find out how much Jane must pay to Tommy per month in order to pay off the personal loan in 7 years. In this case the payment comes to $16.07 per month.