How to use the personal loan repayment calculator
To use the personal loan calculator, you’ll need to enter some details about your loan.
1
Borrowing amount
This is the amount of money you are looking to borrow with your personal loan. It becomes your loan balance to be paid off. Interest is calculated as a percentage of your loan balance each year.
The average personal loan amount in 2023 is $22,643, according to Money data.
2
Interest rate
The interest rate is set by the lender and is expressed as an annual percentage rate (APR). The interest rate on your personal loan is used to calculate both the total amount of interest you will pay over the loan period and your regular repayment amount.
Something to watch out for is calculating your personal loan based on a lender's lowest advertised rate. Your actual rate (and what you end up paying regularly) will likely be different. Personal loan interest rates are heavily influenced by your credit score and the average rate for borrowers in 2023 is 13.87%, according to Money analysis of thousands of loan requests.
3
Loan term
This is the length of your personal loan agreement. Your loan term is important as it will allow you to accurately calculate your monthly, fortnightly, or weekly payments, plus the overall interest cost. The shorter your loan term, the higher your scheduled repayments will be. But you’ll pay less interest overall with a shorter term. Most people choose a five-year term, our data shows.
4
Establishment fees
A lot of lenders charge upfront fees on their personal loans. Establishment fees are included in the calculation for your repayments to provide a more accurate total loan amount.
If you are calculating a personal loan with a variable interest rate, bear in mind you will only be able to calculate the current repayment amount. Your regular repayment and total amount to repay will change if your lender puts your interest rate up or down.
How do lenders calculate personal loan interest?
Our calculator mirrors the way lenders calculate and charge interest on a personal loan.
Generally interest is calculated daily based on the current balance of the personal loan, and charged monthly.
Let’s look at an example...
Say you borrow $20,000 with a fixed rate personal loan, at a 7% annual interest rate.
To calculate the daily interest amount, the lender multiplies your current loan balance by the interest rate: $20,000 x 0.07 = $1,400
Then they divide that by the 365 days in the year = $3.84
To arrive at the monthly interest charge on the personal loan, the lender simply adds up the daily totals for the current month.
That amount is then added to your loan balance to be paid off along with the loan principal.
This works in the same way as interest on many other loan types, like car loans and home loans.
Example of weekly personal loan repayments
Personal loan amount | $5,000 |
|---|---|
Repayments (8% interest) | $23.40 |
Repayments (12.5% interest) | $25.96 |
Repayments (16% interest) | $28.06 |
Personal loan amount | $10,000 |
Repayments (8% interest) | $46.79 |
Repayments (12.5% interest) | $51.92 |
Repayments (16% interest) | $56.12 |
Personal loan amount | $15,000 |
Repayments (8% interest) | $70.19 |
Repayments (12.5% interest) | $77.88 |
Repayments (16% interest) | $84.18 |
Personal loan amount | $20,000 |
Repayments (8% interest) | $93.58 |
Repayments (12.5% interest) | $103.84 |
Repayments (16% interest) | $112.24 |
Personal loan amount | $25,000 |
Repayments (8% interest) | $116.98 |
Repayments (12.5% interest) | $129.80 |
Repayments (16% interest) | $140.30 |
Personal loan amount | $30,000 |
Repayments (8% interest) | $140.38 |
Repayments (12.5% interest) | $155.75 |
Repayments (16% interest) | $168.36 |
Personal loan amount | $40,000 |
Repayments (8% interest) | $187.17 |
Repayments (12.5% interest) | $207.67 |
Repayments (16% interest) | $224.47 |
Personal loan amount | $50,000 |
Repayments (8% interest) | $233.96 |
Repayments (12.5% interest) | $259.59 |
Repayments (16% interest) | $280.59 |
Personal loan amount | $60,000 |
Repayments (8% interest) | $280.75 |
Repayments (12.5% interest) | $311.51 |
Repayments (16% interest) | $336.71 |
| Personal loan amount | Repayments (8% interest) | Repayments (12.5% interest) | Repayments (16% interest) |
|---|---|---|---|
$5,000 | $23.40 | $25.96 | $28.06 |
$10,000 | $46.79 | $51.92 | $56.12 |
$15,000 | $70.19 | $77.88 | $84.18 |
$20,000 | $93.58 | $103.84 | $112.24 |
$25,000 | $116.98 | $129.80 | $140.30 |
$30,000 | $140.38 | $155.75 | $168.36 |
$40,000 | $187.17 | $207.67 | $224.47 |
$50,000 | $233.96 | $259.59 | $280.59 |
$60,000 | $280.75 | $311.51 | $336.71 |
Personal loan repayment (amortisation) calculation
The personal loan calculator uses what’s called an ‘amortisation’ calculation to estimate your repayment amounts. Amortisation basically means the loan balance gradually reduces over time.
This is because your repayments pay down both the interest charged by the lender and the amount you borrowed (known as the principal).
When you make your first repayment on your personal loan, a greater portion of the repayment will go toward repaying interest.
This is simply because the balance of the loan interest is being charged on is higher at the start.
As you continue to make your repayments, the portion of interest paid on each amount will decrease. The portion being used to pay down the loan principal will increase.
When you calculate your personal loan repayments using this formula, it also allows you to estimate your savings if you make extra repayments to repay the loan early.
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