Loan repayment calculator

How it works

Banks usually charge interest on the reducing balance: each month's interest is worked out on what you still owe, so it falls as you repay and more of each payment goes to the loan itself.

Some lenders quote a flat rate instead: interest on the full amount you borrowed for the whole term, even after you have repaid most of it. A flat rate can cost close to twice as much interest as the same reducing-balance rate, so compare offers on the same method before you choose.

A bank's “10% a year” is usually 10% divided by 12, charged each month on what you still owe. A true yearly cost, sometimes called an APY, spreads that 10% across the year, so the monthly payment is a little lower. Pick the one that matches the quote.

Microfinance and salary loans are often quoted by the month. Switch the rate to “a month” to enter them as quoted.

Questions people ask

How is the monthly repayment on a loan worked out?

On a reducing-balance loan the payment is the level amount that clears the loan with interest charged each month on what is still owed: amount × r ÷ (1 − (1 + r)^−n), where r is the monthly rate and n the number of months. On a flat-rate loan it is the amount plus the interest on the whole amount for the whole term, divided by the number of months.

What is the difference between a flat rate and a reducing-balance rate?

A reducing-balance rate charges interest only on what you still owe. A flat rate charges it on the whole amount you borrowed for the whole term. At the same quoted rate a flat-rate loan can cost close to twice as much interest.

Why is this different from another calculator for the same 10%?

It depends on what the 10% means. Charged each month, the way a bank usually quotes it, the month's rate is 10% ÷ 12. As a true yearly cost (APY), 10% is the cost over the whole year and each month is a smaller slice, so the payment is lower. Set “What the rate means” to the one the other calculator uses.

Does this include fees and insurance?

No. Processing fees, insurance and other charges are extra. Ask the lender for the total cost of the loan, or add the fees to the amount to see their effect on the monthly payment.