Before you sign for a loan, it helps to know what it will cost you each month and what it will cost you in total. The two numbers can be very different. This calculator takes the amount you want to borrow, the interest rate and the length of the loan, then shows your monthly payment and how much interest you’ll pay over the whole term. It works for home loans, car loans and personal loans.
Enter the loan amount, which is the sum you’re borrowing.
Enter the annual interest rate as a percentage.
Enter the loan term in years (or months, if your lender quotes it that way).
Read your estimated monthly payment, the total you’ll repay and the total interest.
Try changing one number at a time. Shortening the term or lowering the rate, even slightly, often changes the result more than people expect.
Most fixed-rate loans use the same standard formula:
M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
M is the monthly payment
P is the amount borrowed
r is the monthly interest rate (the annual rate divided by 12, then by 100)
n is the total number of monthly payments
The total repaid is simply M × n, and the interest is that total minus the amount you borrowed.
Say you borrow $200,000 at 6% a year over 30 years.
Monthly rate: 6 ÷ 12 ÷ 100 = 0.005
Number of payments: 30 × 12 = 360
Monthly payment: about $1,199
Total repaid: about $431,700
Total interest: about $231,700
So over 30 years, the interest costs more than the house loan itself.
Now take the same loan over 15 years:
Monthly payment: about $1,688
Total repaid: about $303,800
Total interest: about $103,800
The payment is roughly $490 higher each month, but you save around $128,000 in interest and you’re debt-free fifteen years sooner. Whether that trade works for you depends on your budget, which is why it’s worth trying both.
The result covers the loan itself. Real housing costs often include more:
Property tax
Home insurance
Mortgage insurance, if your down payment is small
Maintenance and repairs
Arrangement or valuation fees charged by the lender
For a mortgage, add these to the result for a more realistic monthly budget. Ask your lender for the exact figures.
Choose a shorter term if you can afford the higher payment.
Make extra payments when you have spare cash. Even small ones reduce the balance, and so the interest charged on it. Check first that your lender doesn’t charge a penalty for paying early.
Compare offers. A difference of half a percentage point on a large loan adds up to thousands over the years.
Put down a bigger deposit, which reduces the amount you borrow in the first place.
Looking only at the monthly payment. A lower payment spread over a longer term usually means much more interest overall.
Mixing up the interest rate and the APR. The APR includes fees, so it’s the better figure for comparing lenders.
Forgetting that rates can change. If your loan has a variable or introductory rate, the payment may rise later. This calculator assumes a fixed rate for the whole term.
Is the result my exact payment?
No. It’s an estimate based on a fixed rate and equal monthly payments. Your lender’s figure may differ because of fees, insurance, taxes or the way interest is calculated.
Can I use it for a car loan or a personal loan?
Yes. The maths is the same for any loan with a fixed rate and regular monthly payments. Just enter the amount, rate and term.
What is amortization?
It’s how a loan is paid off over time. Early payments go mostly towards interest, and later ones go mostly towards the balance. That’s why extra payments made early in a loan have a bigger effect.
Does a longer term always cost more?
Almost always. The monthly payment is lower, but you pay interest for more years, so the total cost is higher.
What interest rate should I enter?
Use the annual rate quoted by your lender. If you’re only exploring, try a few different rates to see how sensitive the payment is.
This calculator provides estimates for general information only and is not financial advice. Please speak to a qualified financial adviser or your lender before taking out a loan.