Remaining balance by month
Repayment schedule
| Month | Principal paid | Interest paid | Remaining balance | Remaining balance |
|---|
How the loan repayment schedule works
The repayment schedule (also known as an amortisation schedule) shows how your loan balance changes over time. Each payment is split into two parts:
- Interest paid - the cost of borrowing
- Principal repaid - the amount reducing your loan balance
At the start of the loan term, a larger portion of each payment goes toward interest. As the balance decreases, the interest portion reduces and more of each payment goes toward repaying the principal.
By the end of the term, the remaining balance reaches zero, assuming all scheduled payments are made.
Understanding principal and interest
When you take out a fixed-rate loan, interest is calculated on the outstanding balance at each repayment period.
This means:
- Higher balances generate more interest
- As the balance falls, the interest charged decreases
- The total interest paid depends on the interest rate and loan term
For example, a longer loan term reduces monthly payments but increases total interest paid over the life of the loan.
Total interest vs total repayment
The calculator shows both:
- Total interest payable - the total cost of borrowing
- Total payable - the original loan amount plus total interest
Reducing the loan term or lowering the interest rate decreases total interest paid. Increasing the loan term spreads repayments over a longer period but increases the total cost of borrowing.
How loan term affects repayment
Loan term has a significant impact on both monthly repayment and total interest.
Shorter term:
- Higher monthly payments
- Lower total interest
Longer term:
- Lower monthly payments
- Higher total interest
You can adjust the loan term above to see how repayment structure changes.
Fixed-rate loan assumptions
This loan calculator assumes:
- A fixed annual interest rate
- Regular payments (based on selected frequency)
- Standard amortisation
- No fees or early repayment penalties
Actual loan agreements may include additional charges or flexible repayment options depending on the lender.
Frequently asked questions
How do I calculate loan repayments?
Loan repayments are calculated using an amortisation formula. Each payment includes both interest and principal. The calculator spreads the loan amount and interest evenly across the selected term so the balance reaches zero by the final payment.
What is the formula for calculating a loan payment?
The standard repayment formula is:
Payment = P x [r(1+r)^n] / [(1+r)^n - 1]
Where:
P = loan amount
r = interest rate per payment period
n = total number of payments
If the interest rate is 0%, repayment equals the loan amount divided by the number of payments.
How much interest will I pay on my loan?
Total interest depends on:
- Loan amount
- Interest rate
- Loan term
Longer terms and higher rates increase total interest paid. The calculator displays total interest over the full loan term.
What affects my monthly loan payment?
Monthly repayment is influenced by:
- Loan amount
- Interest rate
- Loan term
- Payment frequency
Higher rates and shorter terms increase payments. Larger loan amounts also increase repayments.
What happens if I choose a longer loan term?
A longer term:
- Lowers monthly repayments
- Increases total interest paid
A shorter term:
- Raises monthly repayments
- Reduces total interest
What is a repayment schedule?
A repayment schedule shows:
- Each repayment
- How much goes to interest
- How much reduces principal
- The remaining balance after each payment
It helps you understand how your loan decreases over time.
Why is more interest paid at the start of the loan?
Interest is calculated on the remaining balance. At the beginning of the loan, the balance is highest, so more interest is charged. As the balance decreases, the interest portion reduces.
Does payment frequency affect total interest?
It can. More frequent payments (weekly or bi-weekly) may reduce total interest slightly, depending on how the lender calculates interest.
Can I use this calculator for a personal loan?
Yes. This loan calculator works for:
- Personal loans
- Business loans
- Car loans
- Fixed-rate instalment loans
It assumes a fixed interest rate and standard repayment structure.
Can I use this calculator for a business loan?
Yes. As long as the loan uses fixed interest and regular repayments, this calculator provides accurate repayment estimates.