Know the true cost of your loan
Whether you're buying a home or car or need a personal loan, knowing the monthly payment isn't enough. A payment can look affordable while the total you repay is nearly double the loan because of interest over many years. This calculator shows the monthly payment, total interest and its share of the total, plus a detailed yearly amortization schedule.
Two calculation methods
Reducing balance (standard bank loans)
Interest is charged each month only on the remaining balance, so early years are interest-heavy and later years mostly repay principal. The fixed payment is M = P × r ÷ (1 − (1 + r)−n), where P is the principal, r the monthly rate and n the number of months.
Flat rate
Interest is charged on the full original amount for the whole term: interest = principal × annual rate × years, then the total is split into equal payments. Flat rates look lower but cost more — a 5% flat rate on a 5-year loan is roughly equivalent to about 9% on a reducing balance.
Worked example
A 200,000 mortgage over 20 years at 5.5% (reducing balance) costs about 1,376 per month, with roughly 130,000 in interest — around 330,000 in total.
Tips to cut borrowing costs
- Increase your down payment: every amount paid upfront reduces both principal and interest.
- Shorten the term if you can: a slightly higher payment can save tens of thousands in interest.
- Compare the APR: don't rely on the headline rate — fees and insurance add up.
- Ask about early repayment: some lenders charge penalties for paying off early.
- Keep total monthly debt payments below roughly a third of your income.
This calculator is for estimates and planning only. Actual figures may vary with lender fees, insurance and rounding. Consult your lender before deciding.
Frequently Asked Questions
How is the monthly payment calculated?
Enter the amount, annual rate and term; the tool applies the standard amortization formula used by banks.
What's the difference between flat and reducing rates?
Flat rates charge interest on the original amount for the whole term; reducing rates only on the outstanding balance, so reducing is cheaper at the same rate.
Can I calculate an interest-free loan?
Yes. Enter 0% and the payment is simply the amount divided by the number of months.
Why is interest so high in the first years?
Interest is charged on the remaining balance, which is largest at the start; as it falls, more of each payment goes to principal.
Does it work for car loans?
Yes — any fixed-rate installment loan, including car, personal and student loans.
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