Money & Budget

Loan / Installment Calculator

This calculator uses the standard amortisation formula to show what a loan costs each month and in total, including how much of it is interest.

What this calculator does

Uses the standard amortisation formula to turn a loan amount, annual interest rate and term into a fixed monthly payment, then shows the total repayment, total interest and how much of the first payment is interest.

How to interpret the result

The monthly payment is the number to test against your budget. Total interest shows the real cost of borrowing beyond the principal: comparing a short and a long term side by side usually reveals that the longer term costs far more overall despite the smaller payment.

Assumptions

• The interest rate is fixed for the full term.
• Payments are monthly and level for the whole loan.
• No arrangement fees, insurance or early-repayment charges are included.

Limitations

• Variable-rate loans can change payment size mid-term; this tool cannot model that.
• Fees and mandatory insurance raise the effective rate above the advertised one.
• Overpayments are not modelled directly — approximate by shortening the term.

How it works

The monthly payment uses P × r ÷ (1 − (1 + r)⁻ⁿ), where P is the amount borrowed, r is the annual rate divided by twelve, and n is the number of monthly payments. Total repayment is the payment multiplied by n, and interest is that total minus the amount borrowed.

Worked example

Borrowing 18,000 at 8.5% over five years gives a payment of about 369 a month. Across 60 payments that is roughly 22,150 repaid, of which about 4,150 is interest.

How to use it

1. Enter the amount you will actually borrow, after any deposit.
2. Use the annual rate, not a monthly one — the calculator divides it for you.
3. Compare three and five year terms to see the trade-off between payment size and total interest.
4. Check the payment against the margin from the Monthly Budget Calculator before committing.

Factors to consider

• Early payments are mostly interest, which is why paying extra early saves the most.
• Fees and mandatory insurance raise the effective rate above the advertised one.
• Variable-rate loans can change payment size mid-term; this calculator assumes a fixed rate.

Useful for

• Checking a quoted monthly payment against your budget before signing.
• Comparing a 3-year and a 5-year term to see the trade-off between payment size and total interest.
• Seeing how much a larger deposit (smaller loan amount) saves in interest over the term.

Frequently asked questions