How to Use the Personal Loan Calculator

Enter the amount you want to borrow, the annual personal loan interest rate and the loan term. Choose whether repayments will be monthly, fortnightly or weekly.

If the lender charges an upfront establishment fee, you can also enter that amount to estimate the overall cost of the loan.

The calculator will estimate:

• Your regular personal loan repayment;
• Total interest over the loan term;
• Total principal-and-interest repayments;
• Total cost including the entered establishment fee;
• Approximate final repayment date;
• A year-by-year loan schedule; and
• The effect of different interest rates on repayments.

How Are Personal Loan Repayments Calculated?

For a standard principal-and-interest personal loan with fixed repayments, the repayment can be estimated using an amortising loan formula:

The calculator converts the annual interest rate into a rate for the selected repayment frequency before calculating the repayment.

Personal Loan Example

What Is a Personal Loan?

A personal loan is money borrowed from a bank, credit union or other lender and repaid over an agreed period.

Personal loans are commonly used for purposes such as:

• Buying a vehicle;
• Home improvements;
• Debt consolidation;
• Travel;
• Medical or household expenses;
• Education costs; or
• Other significant purchases.

Secured vs Unsecured Personal Loans

Secured personal loan

A secured personal loan is backed by an asset such as a vehicle. Because the lender has security over the asset, the interest rate may sometimes be lower than for an unsecured loan.

If repayments are not made, the lender may have rights over the asset, subject to the loan agreement and applicable law.

Unsecured personal loan

An unsecured personal loan does not use a specific asset as security. The lender therefore relies more heavily on the borrower’s income, credit history and ability to repay.

Unsecured loans can have higher interest rates because the lender may face greater credit risk.

Fixed vs Variable Personal Loan Interest Rates

Fixed rate

A fixed-rate personal loan generally keeps the same interest rate for the agreed fixed period. This can make repayments more predictable.

Variable rate

A variable personal loan interest rate may change during the loan. If the rate rises, repayments or the time required to repay the loan may change depending on the product.

This calculator assumes the entered interest rate remains constant for the entire modelled loan term.

How Does the Interest Rate Affect a Personal Loan?

A higher interest rate generally increases both the regular repayment and the total cost of borrowing.

For example, the repayment on a $25,000 loan at 8% will generally be lower than the repayment on the same loan at 12% when the loan term is unchanged.

The interest-rate comparison in the calculator helps illustrate this difference.

What Is the Comparison Rate?

When comparing Australian consumer loans, you may see both an interest rate and a comparison rate.

The advertised interest rate describes the rate charged on the loan, while a comparison rate is designed to provide an indication of the loan’s cost after certain fees and charges are taken into account under the prescribed comparison-rate calculation.

A comparison rate can make it easier to compare loans, but it may not include every possible fee or reflect your exact loan amount and term.

This calculator uses the interest rate you enter and any establishment fee entered separately. It does not calculate an official Australian comparison rate.

Why Do Loan Fees Matter?

Interest is not necessarily the only cost of a personal loan. Depending on the lender and product, fees may include:

• Application or establishment fees;
• Monthly account fees;
• Annual fees;
• Late payment fees;
• Early repayment fees;
• Direct debit fees; or
• Other charges permitted under the loan agreement.

The calculator includes an optional establishment fee, but recurring or conditional fees should be assessed separately.

Does a Longer Personal Loan Term Reduce Repayments?

A longer loan term generally reduces the regular repayment because the principal is spread across more repayment periods.

However, keeping the loan outstanding for longer can increase total interest paid.

For this reason, the lowest regular repayment does not necessarily mean the lowest total loan cost.

Can I Pay a Personal Loan Off Early?

Some personal loans allow additional repayments or early repayment, which may reduce future interest.

However, lender rules vary. Some products may charge early repayment or break fees, particularly where a rate is fixed.

Check the loan contract before making additional payments or paying out the loan early.

What Affects Personal Loan Approval?

A lender may consider factors including:

• Income;
• Employment stability;
• Living expenses;
• Existing loans and credit cards;
• Credit history;
• Requested loan amount;
• Loan purpose;
• Whether the loan is secured or unsecured; and
• The lender’s own credit policy.

This calculator estimates repayments only and does not determine whether a lender will approve an application.

Personal Loan Calculator Assumptions

This calculator assumes:

• The loan is a principal-and-interest loan;
• The interest rate remains constant;
• Repayments remain constant;
• No additional repayments are made;
• The optional establishment fee is paid separately;
• No monthly or annual fees are included;
• No late-payment fees are included;
• No early repayment occurs;
• Interest is converted to the selected repayment frequency; and
• Results are rounded for display.

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