Enter the amount borrowed, the annual interest rate and the term in years, and the result shows the monthly instalment, the total interest and the total you would repay.
The standard amortisation formula is used: the annual rate is divided by twelve for a monthly rate, the term is multiplied by twelve for a number of payments, and the instalment is the figure that clears principal and interest over exactly that many equal payments. This assumes a fixed rate for the whole term and payments that never vary. Total interest is simply the total repaid minus the amount borrowed. Results are shown in dollars, but the arithmetic is currency-neutral — the same numbers hold for any currency.
What this figure leaves out
-
Fees are excluded:
arrangement fees, booking fees and broker commissions are not part of the instalment and can add a significant amount to the real cost of borrowing.
-
A fixed rate is assumed throughout:
a variable or tracker rate changes the instalment whenever the rate moves, and a fixed period that expires into a higher standard rate is not modelled here.
-
Insurance is not included:
payment protection or life cover required as a condition of the loan is a separate cost, not part of capital and interest.
-
Compare the APR, not the instalment:
a longer term always produces a smaller monthly payment and a larger total cost. The advertised annual percentage rate is the figure designed for comparison.
What the figure actually represents
The [msm_tool slug="loan-calculator"] applies the standard amortisation formula: the annual rate divided by twelve for a monthly figure, the term multiplied by twelve for a number of payments, and an instalment sized to clear both principal and interest across exactly that many equal payments. Total interest is simply the total repaid minus the amount borrowed — the arithmetic itself is straightforward and, being currency-neutral, holds for any currency the numbers are entered in.
Fees are not part of this number
Arrangement fees, booking fees and broker commissions never appear in the calculation, despite being a real cost of borrowing that can add a meaningful amount on top of what the instalment alone suggests. A loan that looks cheapest on its headline rate can end up costing more once those fees are added in.
Insurance sits outside it too
Payment protection or life cover required as a condition of the loan is a separate cost from capital and interest, and none of it is folded into the figure shown here. Any lender that requires it will add it on top of the number this calculation produces.
A fixed rate is assumed for the entire term
The calculation holds the rate constant from the first payment to the last. A variable or tracker rate changes the instalment every time the underlying rate moves, and a fixed introductory period that later reverts to a lender's standard rate is not represented here at all — that reversion needs modelling separately before relying on this figure for the full life of the loan.
Compare offers on APR, not on the monthly instalment
A longer term always produces a smaller monthly payment and a larger total cost, which makes the instalment alone a poor basis for comparing two different loan offers. The annual percentage rate is the figure specifically designed to fold fees and structure into one comparable number, and it is the one worth lining up across offers rather than the payment size alone.
Why a lender's actual quote will differ slightly
Day-count conventions, rounding rules, and whether a fee gets added to the principal before interest is calculated all vary between lenders in ways this calculation does not attempt to replicate. Treat the result here as a planning estimate rather than a quotation, and expect a lender's own illustration to land close but rarely identical.