Loan & repayment calculator
Monthly payment and total interest for equal-payment/principal loans.
* For reference only. Actual loans may differ due to early-repayment fees, preferential rates, repayment cycles, and other factors.
Two lenders quote the same rate on the same amount and the monthly figures still come out different — because one is amortising the loan on equal payments and the other on equal principal. This calculator shows what each method costs, both per month and in total interest over the life of the loan, so the quotes can be compared on the same footing.
How it works
What you enter
| Field | Meaning |
|---|---|
| Loan amount | The principal borrowed |
| Annual interest rate (%) | The nominal yearly rate, e.g. 4.5 |
| Term (months) | Total number of repayments — 36 for three years |
| Repayment method | Equal payments, or equal principal |
The annual rate is converted to a monthly rate internally by dividing by 12 and by 100.
Equal payments
The same amount leaves your account every month. The payment is:
payment = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1)
where P is the principal, r the monthly rate and n the number of months. Because interest is charged on the outstanding balance, the early payments are mostly interest and the split shifts towards principal as the balance falls. This is how most personal and consumer loans are structured.
Equal principal
You repay the same slice of principal each month — P ÷ n — plus interest on whatever is still owed. The first payment is therefore the largest and every one after it is smaller.
Because the balance drops faster, total interest under equal principal is always lower than under equal payments at the same rate and term. What you trade for that is a heavier burden in the opening months.
What the figures leave out
Only principal, rate and term go into the calculation. Arrangement and origination fees, credit insurance, early repayment penalties, and any rate that moves during the term are not modelled, and a variable-rate loan will drift away from this projection as soon as the rate changes. Treat the output as a comparison tool rather than a quote, and confirm the binding numbers with the lender.
Terms explained
- Principal
- The amount actually borrowed, before any interest is added.
- Term
- The repayment period, entered here in months. A three-year loan is 36.
- Equal payments
- A schedule where the monthly amount stays constant and the interest-to-principal split changes over time. Often called an annuity or amortising schedule.
- Equal principal
- A schedule where the principal repaid each month is constant and the payment falls as interest on the shrinking balance falls.
- Total interest
- The sum of every interest charge over the full term — the cost of the loan on top of what you borrowed.
Frequently asked questions
Which costs less, equal payments or equal principal?
Equal principal, on total interest, at the same rate and term — the balance falls faster so less interest accrues on it. The catch is that the first months cost noticeably more than under equal payments, so the cheaper option is only better if the early cash flow is comfortable.
Why isn't the monthly payment just the loan divided by the months, plus interest?
That describes equal principal, where the payment falls month by month. Under equal payments the figure is levelled out across the whole term, which requires the compounding formula — you pay slightly more interest overall in exchange for a predictable, unchanging amount.
Can I use this for a mortgage?
The arithmetic is the same for any amortising loan, so it works for a rough comparison. It does not model interest-only periods, grace periods, offset accounts, or rate resets on a variable mortgage, all of which materially change a real repayment schedule.
What happens if I enter 0 for the interest rate?
The calculation falls back to the principal divided by the number of months, which is the correct answer for an interest-free loan. Total interest comes out as zero.
Why is my bank's quoted payment different?
Lenders add fees, insurance, and sometimes a different day-count or rounding convention, and a quoted APR is not always the same as the nominal rate this calculator uses. Differences of a few units are rounding; larger gaps usually mean something is bundled into the payment.
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