Loan Calculator
See the monthly repayment on a fixed-rate loan, and what the interest adds up to.
What this calculates
A fixed-rate loan is repaid in equal monthly instalments until the debt is gone. Every payment covers the interest since the last one, and the rest reduces what you owe. The payment stays the same from first month to last, which is why the term matters as much as the rate: a longer loan is easier each month and dearer overall. Enter the rate you were quoted for the year. This is the same calculation a mortgage uses — a mortgage is simply a very large, very long loan.
Formula
r = yearly rate ÷ 12 ÷ 100 (the monthly rate) n = years × 12 (the number of payments) monthly repayment = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1) at 0%: monthly repayment = P ÷ n total repaid = monthly repayment × n total interest = total repaid − P
Example
Borrow €10,000 at 6% over 5 years. The monthly rate is 0.5% and there are 60 payments, which works out at €193.33 a month. You repay €11,599.68 in all, so the loan costs €1,599.68 in interest.
Frequently asked questions
Why is the interest less than 6% of €10,000 for five years?
Because you are not borrowing €10,000 for five years — you start paying it back immediately. Six per cent of €10,000 for five years would be €3,000, but the average balance over the term is closer to €5,300, so the real cost is about €1,600.
Is a longer term cheaper?
Each month, yes; overall, no. The same €10,000 at 6% is €193.33 a month over 5 years and €111.02 over 10 — but the ten-year loan costs €3,322 in interest instead of €1,600, because the debt is outstanding for twice as long.
What about arrangement fees and early repayment charges?
They are not included here. A fee rolled into the loan raises the amount borrowed, so add it to the amount before calculating. Overpaying usually saves interest, but some lenders charge for it — check the agreement.
Is APR the same as the interest rate?
Not quite. APR bundles compulsory fees in with the interest to make offers comparable. If your quote has no fees the two match; if it has fees, entering the APR here gets you closer to the true cost than the headline rate does.