Loan Calculator

What this calculator works out

Give it an amount, a rate, and a term, and it returns the level payment that clears the debt exactly on schedule. Alongside that you get the total interest, the total repaid, and a year-by-year view of how the balance falls.

It suits any fixed-rate instalment loan: personal loans, student loans, equipment finance, a loan from a family member you want to formalise. Mortgages and car loans have extra moving parts, so they have their own pages.

Reading the results

The headline payment is the easy part. The number worth sitting with is the total interest, because it tells you what the borrowing costs rather than what it costs per month.

The yearly table shows something borrowers are often surprised by: early payments are mostly interest. On a long loan, the first year can leave the balance almost untouched. That is not a fee or a trick — interest is charged on what you still owe, and at the start you still owe nearly everything. As the balance falls the interest charge falls with it, so a larger slice of the same payment reaches the principal, and the balance drops faster and faster towards the end.

How the payment is derived

Every payment must cover the interest that has accrued since the last one, with the remainder reducing the balance. The payment that makes the balance land exactly on zero at the end of the term is:

payment = principal × i / (1 − (1 + i)−n)

where i is the rate for one payment period and n is the number of payments. At a zero rate the formula breaks down — dividing by zero — and the answer is simply the principal split evenly.

A worked example

Borrow $25,000 over five years at 7.5%, paid monthly. The monthly rate is 0.625% and there are 60 payments, giving a payment of $500.95. Across the term you repay about $30,057, so the borrowing costs roughly $5,057.

Add $100 a month and the loan clears in 49 payments instead of 60 — eleven months early — and the interest falls by about $1,014. The saving comes from removing not just that $100 of debt but every future interest charge it would have carried.

Where extra payments help most

Extra payments do the most good early, when the balance — and therefore the interest accruing on it — is at its largest. The same $100 applied in the final year saves almost nothing, because there is barely any interest left to avoid.

Before overpaying, check whether the loan carries a prepayment penalty, and whether the lender applies extra amounts to principal rather than holding them as an advance payment. Both are worth a phone call.

What this does not cover

• Fees. Origination charges, arrangement fees, and required insurance are excluded. They are exactly what APR exists to capture, which is why comparing loans on rate alone is misleading.
• Variable rates. The rate is held fixed for the whole term.
• Irregular payments. Payment holidays, balloon payments, and interest-only periods are not modelled.
• Accrual conventions. Some lenders accrue daily rather than per period, which shifts the total slightly.

See our methodology for how these tools are built and tested.