How to use the loan calculator
Enter how much you want to borrow, the yearly interest rate the lender quotes, and how long you will take to pay it back. The calculator gives the fixed monthly payment, often called the EMI (equated monthly instalment), along with the total interest and the full amount you hand back.
The chart shows the balance shrinking over time. Early payments are mostly interest, so the line falls slowly at first and faster towards the end. Try a shorter term to see how much interest it saves, and what it does to the monthly payment.
The formula
Payment = P × r ÷ (1 − (1 + r)−n)
where P is the amount borrowed, r is the monthly interest rate (the yearly rate divided by 12, written as a decimal) and n is the number of monthly payments. Total interest is all the payments added together, minus the amount borrowed.
Worked example
Borrowing 20,000 at 7.5% for 5 years means r = 0.075 ÷ 12 = 0.00625 and n = 60. The payment works out to 400.76 a month. Over 60 months you pay back 24,045.54, so the loan costs 4,045.54 in interest.
Results are estimates for planning. They are not financial advice, and a lender’s own figures may differ because of fees and rounding.
Common questions
Does this include fees or insurance?
No. It covers the loan amount and interest only. Add any arrangement fee to the amount borrowed if it is rolled into the loan.
Will paying extra reduce my interest?
Usually yes, because interest is charged on the balance that remains. Check that your lender does not charge an early repayment fee.
Is this accurate for a flat-rate loan?
No. This uses the reducing-balance method, which most banks use. A flat-rate loan charges interest on the full amount for the whole term and costs more for the same quoted rate.