🚗 Loan Repayment Calculator
Calculate monthly repayments and total interest for car loans, personal loans, and more.
$
%
yrs
Understanding loan repayments — how the maths works
Loan repayments are calculated using an amortisation formula that keeps your monthly payment constant while the split between principal and interest shifts over time. In early years, most of each repayment is interest. In later years, most is principal.
This is why the first few years of a long loan feel like you're barely making a dent — you're mostly paying interest on the full balance. As the principal reduces, the interest component shrinks and more of each payment chips away at the debt.
- Fortnightly repayments: Paying half the monthly amount fortnightly means 26 half-payments per year — equivalent to 13 monthly payments. You effectively make one extra monthly payment annually, shortening a 30-year loan by years.
- Extra repayments: Any additional payments go straight to principal, reducing future interest. Even $50/week extra makes a material difference over decades.
- Redraw vs offset: Extra repayments sit in your loan (redraw) or alongside it (offset account). Both reduce interest, but they have different legal and tax implications.
- Interest-only periods: Your repayments are lower during interest-only periods, but the debt doesn't reduce. Common with investment loans.
🦘 Fun fact: The difference between a 25-year and a 30-year loan on $600,000 at 6% is about $160,000 in total interest. That's a lot of money to spend on extra years of debt. The monthly repayment difference is roughly $400 — significant, but worth knowing the true cost.