About the loan calculator
The loan calculator shows what a loan will cost: the regular repayment, the total interest and the full amount you pay back. Use it for car loans, personal loans, student loans or any borrowing with fixed monthly repayments.
It also covers loans repaid in one payment at the end, where interest compounds until the due date. Both modes make the cost of borrowing visible before you sign.
Who should use the loan calculator
- Borrowers comparing offers with different terms or rates.
- People deciding between a lower monthly payment and a lower total cost.
- Small business owners and freelancers modelling an equipment or vehicle loan.
How to use the loan calculator: what each input means
- Loan amount
- How much you borrow.
- Term
- The repayment period in years plus any extra months.
- Interest rate
- The yearly interest rate on the loan.
- Loan type
- Monthly repayments (the usual instalment loan) or a single payment at the end.
- Compounding
- For single-payment loans only: how often interest is added to the balance.
How the loan calculator works: method and formula
For monthly repayments the calculator uses the standard instalment formula. Each month, interest is charged on the remaining balance and the rest of the payment reduces it, until the balance reaches zero at the end of the term.
For a single payment at the end, nothing is paid until the due date. Interest compounds, so the amount owed is the loan multiplied by (1 + rate ÷ n) raised to the power n × years.
- Monthly repayment
- M = P × r ÷ (1 − (1 + r)^−n)
- Single payment at the end
- A = P × (1 + R ÷ m)^(m × t)
- Where
- P = amount, r = yearly rate ÷ 12, n = months, R = yearly rate, m = compounding periods per year, t = years
How to read your loan calculator result
Look at total interest as well as the monthly figure. A longer term lowers the payment but usually raises the total interest, sometimes by a lot. If you can afford a shorter term, the saving is usually larger than a small difference in rate.
The yearly table shows how the balance falls. Check whether your lender charges early-repayment fees before overpaying.
Loan Calculator worked example
Borrow $25,000.00 over 5 years at 7% a year with monthly repayments.
- Monthly rate r = 7% ÷ 12 = 0.583333%, number of payments n = 60.
- Payment = $25,000.00 × r ÷ (1 − (1 + r)^−60) = $495.03.
- Total repaid = 60 × $495.03 = $29,701.80.
Monthly payment $495.03, total interest $4,701.80. If the same $25,000.00 were instead repaid in one payment after 5 years with monthly compounding at 7%, the amount due would be $35,440.63 (interest $10,440.63).
Practical uses of the loan calculator
- Comparing a 3-year and a 5-year car loan.
- Checking how much a personal-loan offer really costs over its life.
- Working out the lump sum owed on a bullet-style loan or an informal family loan.
Assumptions and limitations of this calculator
- Assumes a fixed rate with level monthly repayments and interest charged monthly. Variable rates, payment holidays and balloon payments are not modelled.
- Arrangement fees, insurance and other charges are not included. Add them to the amount if you finance them, or compare with the lender's APR (TAEG in France, TAE in Spain).
- Payments are not rounded to the cent, so a lender's final instalment may differ by a few pence or cents.
Notes for different countries and units
- India and Pakistan: the level monthly repayment on a bank loan is often called an EMI (equated monthly instalment). It is the same payment this calculator works out from the amount, rate and term.
- Flat rate versus reducing balance: some lenders, particularly on car and consumer loans in several countries, quote a flat rate, where interest is charged on the original amount for the whole term. A flat rate looks lower than a reducing-balance rate that costs the same. This calculator uses the reducing-balance rate. If you only have a flat rate, compare offers by their total repayment instead.
- United States and United Kingdom: an APR also includes certain fees, so it is usually higher than the plain interest rate. Enter the interest rate here and compare APRs separately.
- Type amounts without separators (2500000) or with international grouping (2,500,000). Lakh-style grouping such as 25,00,000 is not accepted by the inputs.