What it is and what it is for
Before signing a loan you should know what you will pay each month and, above all, how much extra you will pay in total. This calculator uses the standard amortising formula, common for personal loans, car loans and mortgages: the monthly payment is always the same and at the start most of it goes to interest.
You can try different terms and interest rates to see the balance between a comfortable payment and a reasonable total cost. A longer term lowers the payment but almost always raises the interest you end up paying by a lot.
How to use it, step by step
- Type the amount you need to borrow.
- Enter the nominal annual interest rate the lender offers you.
- Enter the term in years. For months, use decimals: 1.5 is 18 months.
- Press Calculate to see the monthly payment, the total repaid and the interest.
- Repeat with another term and compare how much the total cost changes.
Worked example
A 10,000 loan at 12% a year over 5 years has a payment of about 222.44 a month. In total you repay close to 13,346, which is about 3,346 in interest. Over 2 years the payment rises to 470.73, but the interest drops to about 1,298.
Frequently asked questions
What does the calculated payment include?
Only principal and interest. It leaves out arrangement fees, bundled insurance and admin costs, which make the loan more expensive.
Is the nominal rate the same as the APR?
No. The nominal rate is the plain interest. The APR also includes fees and compounding, and is used to compare offers. Enter the nominal rate here.
What happens if I pay early?
You reduce the outstanding principal and therefore future interest. This calculator does not model early repayments.
Does it work for a mortgage?
Yes for a fixed-rate mortgage. With a variable rate, the payment will change when the reference index changes.