Loan Calculator
A personal loan is repaid in fixed monthly instalments: the annuity. Enter the amount, rate and term to see your monthly payment and total interest cost.
Result
ยฃ300.57
Monthly payment
- Total to repay
- ยฃ18,034.15
- Total interest cost
- ยฃ3,034.15
How this was calculated
- 1Find the monthly rate7.5% รท 12 = 0.625%
- 2Find the number of instalments5 ร 12 = 60
- 3Apply the annuity formula
Formula
M = P ร i รท (1 โ (1 + i)โปโฟ)
This is the same annuity formula used for a mortgage: you pay the same amount every month, with the interest share higher at first and falling over time as the repayment share rises.
What the variables mean
- M
- Monthly payment
- P
- Loan amount
- i
- Monthly interest rate
- n
- Number of monthly instalments
Worked examples
โฌ 15,000 loan, 7.5% rate, 5 years
โ Monthly payment โ โฌ 300, total interest โ โฌ 3,030.
Common mistakes
- Looking only at the monthly payment and ignoring total interest cost over the full term.
- Choosing a longer term to lower the monthly payment, without realising total interest rises as a result.
Tips
- Compare loans on total interest cost, not just the monthly payment.
Important to know
- Some loans charge origination fees or have a variable rate; this calculator assumes a fixed rate with no extra costs.
When to use it
- Estimating the monthly payment on a personal loan for a car or renovation.
- Comparing different terms before taking out a loan.
Frequently asked questions
What is the difference between a loan and a mortgage?
A mortgage is a loan specifically for a home, secured by the property, usually at a lower rate and longer term than a personal loan.
Can I make extra repayments on a loan?
Many loans allow this, sometimes with an early-repayment fee. Use the loan payoff calculator to see how much time and interest extra repayments save.
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