Personal loan repayments and total interest.
Monthly repayment
—
Total interest
—
Total repaid
—
Your breakdown
Updates live as you type| Item | Amount |
|---|
Worked example
Borrow $20,000 over 5 years at an unsecured personal loan rate of 12.95 percent. Spreading the loan across 60 monthly payments using the standard amortising formula gives a repayment of about $455 a month, which is roughly $105 a week. Each payment is part interest and part principal, with interest heaviest at the start while the balance is largest.
Over the full 60 months you repay about $27,273 in total. Of that, $20,000 is the money you borrowed and $7,273 is interest. In other words the interest adds more than a third on top of the amount borrowed at this rate. A shorter term raises the monthly payment but cuts the total interest sharply, and a secured car loan would usually carry a lower rate than this unsecured example. Lender establishment and ongoing fees are not included and would push the true cost higher.
How it is calculated
The repayment uses the standard amortising-loan formula. The annual interest rate is divided by 12 to get a monthly rate, and the term in years is multiplied by 12 to get the number of payments. The formula sets a fixed monthly amount that, after interest is charged each month and the rest reduces the balance, pays the loan to zero on the final payment. Total repaid is simply the monthly payment times the number of payments, and total interest is that figure minus the original amount borrowed. The model assumes a fixed rate and no extra repayments. Personal loan advertised rates in New Zealand vary widely with your credit and the lender, so compare the total repaid rather than the headline rate, and add any establishment or monthly account fees the lender charges.