A loan calculator computes the fixed monthly repayment required to fully repay a loan over a set term. It uses the amortisation formula to split each payment into an interest component and a principal reduction component, showing you the total interest cost over the life of the loan.

1. Enter the total loan amount.
2. Enter the annual interest rate.
3. Enter the loan term in months.
4. Click Calculate to see your monthly payment and total cost.

Loan: $20,000 at 8.5% p.a. over 60 months (5 years).
Monthly rate = 8.5% ÷ 12 = 0.7083%
Monthly payment ≈ $410 | Total interest ≈ $4,600 | Total repayment ≈ $24,600

A higher interest rate or longer term increases total interest paid. Shorter terms mean higher monthly payments but significantly less interest overall. Even small extra repayments can reduce the loan term and total interest.

• Entering years instead of months for the term.
• Using a flat rate instead of a reducing balance rate — they produce very different results.
• Ignoring fees, which can add significantly to the true cost of borrowing.

What is the difference between a flat rate and a reducing balance rate?

A flat rate applies interest to the original loan amount throughout the term. A reducing balance rate applies interest only to the outstanding principal, which decreases with each payment. This calculator uses the reducing balance method, which is standard for most personal and car loans.

Can I use this for a car loan?

Yes. Enter the car loan amount, the annual interest rate from your lender and the term in months. The result is your estimated monthly repayment.

How do I reduce total interest?

Make extra repayments when possible, choose a shorter term, or negotiate a lower interest rate. Even a 0.5% rate reduction on a large loan saves thousands over the term.