Australia
Loan calculator
Planning to borrow a fixed sum and pay it back monthly? This works out the instalment and the total interest before you sign. Put in the amount you want to borrow, the annual interest rate the lender quotes, and how many years you will take to clear it. Out comes the monthly payment, the grand total you repay, and the interest portion on top of the loan. The arithmetic is currency-agnostic, so choosing your country only changes how the figures are formatted, not the result.
How it works
- The balance is cleared in equal monthly instalments across the term. This even-payment method is called amortisation.
- Each instalment first covers the month's interest on the outstanding balance, and whatever is left chips away at the principal.
- Because the balance is largest at the start, early payments are mostly interest and later ones mostly principal.
- Add up every instalment and subtract the amount borrowed; the difference is the total interest you pay.
- A higher rate or a longer term both raise total interest, even when the monthly figure looks comfortable.
M = P x r / (1 - (1 + r)^-n)
This is the standard annuity payment used for repayment loans. P is the amount borrowed, r is the monthly rate (the annual rate divided by twelve), and n is the count of monthly payments. The formula spreads principal and interest into one level instalment, so M stays the same each month while the split inside it shifts from interest toward principal. When r is zero the payment is simply P divided by n.
- M
- the fixed monthly instalment
- P
- principal, the sum borrowed
- r
- monthly interest rate (annual rate / 12 / 100)
- n
- number of payments (years x 12)
Typical loan rates and terms
| Personal loan, mid-size amount | 6% to 12% | unsecured, terms of 1 to 5 years |
| Car finance | 5% to 10% | often secured on the vehicle, 3 to 5 years |
| Common personal loan term | 3 to 5 years | shorter terms cost less in total interest |
| Credit card carried balance | 20% or more | far dearer than a fixed loan for the same debt |
Worked example
Borrowing 10,000 at 5% over 5 years works out to about 188.71 a month. Across 60 payments that is roughly 11,322 repaid, so around 1,322 of it is interest. Stretch the same loan to 7 years and the monthly drops, but the total interest rises.
Key facts
- The instalment is fixed for the whole term, but its makeup tilts from interest toward principal as the balance falls.
- On a 10,000 loan at 5% over 5 years the interest comes to roughly 1,322, about 13% on top of the amount borrowed.
- Stretching a term lowers the monthly figure yet raises the total interest, because the balance is owed for more months.
- At a 0% rate the sum repaid equals the amount borrowed, and the monthly is just the principal split evenly.
Tips
- Compare loans on total repaid, not the monthly figure, since a low instalment can hide a higher lifetime cost.
- Round the term down where the monthly is still affordable; a year shorter usually saves a noticeable chunk of interest.
- Use the lender's APR rather than the headline rate when shopping around, because APR folds in compulsory fees.
- If you can overpay without penalty, even small extra amounts early on cut the interest charged for the rest of the term.
Borrowing 20,000 over 5 years at different rates
| Annual rate | Monthly payment | Total repaid | Total interest |
|---|---|---|---|
| 3% | 359.37 | 21,562 | 1,562 |
| 5% | 377.42 | 22,645 | 2,645 |
| 7% | 396.02 | 23,761 | 3,761 |
| 9% | 415.17 | 24,910 | 4,910 |
Frequently asked questions
Is the rate here the same as APR?+
Not quite. APR rolls in certain compulsory fees alongside the interest, so it usually sits a little above the nominal rate used here. A loan carrying fees costs marginally more than this estimate suggests.
Are arrangement fees or insurance included?+
No. The figure is the bare repayment on the sum borrowed at the rate you type in. Any product fee or optional payment-protection cover needs adding separately.
Does paying extra each month help?+
Generally yes. Overpaying shrinks the balance sooner, which cuts the interest charged from then on. Check first, though, as some agreements levy an early-repayment charge.
Why does a longer term cost more overall?+
A longer term lowers each payment but keeps a balance outstanding for longer, so interest accrues over more months. Lower monthly, higher lifetime cost.
Things to watch
- The result assumes a fixed rate. On a variable-rate loan the payment can move if the lender changes the rate mid-term.
- Missing or delaying a payment adds interest and possible charges, so the real cost can exceed the figure shown.
- A quoted monthly that looks affordable can still carry heavy total interest over a long term; check both numbers.
Last updated: 2026-01-01
This is an estimate for general guidance, not financial, tax, legal or medical advice. Figures can change and individual circumstances vary. Always confirm with the official sources listed before making decisions.
- This is general information, not financial advice.
- Excludes fees, insurance and any introductory or variable-rate changes during the term.
- Assumes the rate stays fixed and every payment is made on time.
Reviewed by Vikas Dulgunde.