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Loan calculator: payment, interest and real cost
Enter a loan and see the payment, the total interest and the full repayment schedule for the interest method you choose, including what a processing fee does to the real cost.
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This loan calculator works out the repayment for four interest methods: flat rate, reducing balance with equal installments or equal principal, and interest-only. It shows the payment, total interest, total repaid, the real annual cost including any fee, and a full schedule you can download.
- Payment each period
- 88.85
- Total interest
- 66.19
- Total repaid
- 1,066.19
- Real annual cost (APR)
- 12.00%
- 12.68% compounded
| Payment | Amount | Interest | Principal | Balance |
|---|---|---|---|---|
| 1 | 88.85 | 10.00 | 78.85 | 921.15 |
| 2 | 88.85 | 9.21 | 79.64 | 841.51 |
| 3 | 88.85 | 8.42 | 80.43 | 761.08 |
| 4 | 88.85 | 7.61 | 81.24 | 679.84 |
| 5 | 88.85 | 6.80 | 82.05 | 597.79 |
| 6 | 88.85 | 5.98 | 82.87 | 514.92 |
| 7 | 88.85 | 5.15 | 83.70 | 431.22 |
| 8 | 88.85 | 4.31 | 84.54 | 346.68 |
| 9 | 88.85 | 3.47 | 85.38 | 261.30 |
| 10 | 88.85 | 2.61 | 86.24 | 175.06 |
| 11 | 88.85 | 1.75 | 87.10 | 87.96 |
| 12 | 88.84 | 0.88 | 87.96 | 0.00 |
Figures are rounded to two decimals per payment, and the final payment absorbs any rounding difference of a cent or two. This calculator is an illustration, not a loan offer, and does not account for local disclosure or interest rules.
How this loan calculator works
You enter the loan amount, the interest rate per year, the number of installments and how often they are paid. The calculator converts the annual rate to a rate per period, builds the schedule for the method you pick, and adds up the interest and the total repaid. If you enter a processing fee, it treats the fee as part of the cash flows, so the real annual cost (APR) reflects what the borrower actually receives and pays.
The four methods behave differently. Reducing balance with equal installments charges interest only on the principal still owed and keeps the payment constant, using Payment = P × r ÷ (1 − (1 + r)^−n). Reducing balance with equal principal repays the same principal each period, so payments start higher and fall. Flat rate charges interest on the original principal for the whole term. Interest-only charges interest each period and repays the principal in the final payment.
Read how to calculate loan interest for each formula in detail, and flat rate vs reducing balance interest to see why the same quoted rate can cost so differently.
The same loan under each method
A loan of 1,000 at 12% a year, repaid monthly over 12 months, gives these results. The figures come from the same calculation as the calculator above.
| Method | First payment | Total interest | Total repaid | Real annual cost |
|---|---|---|---|---|
| Flat rate | 93.33 | 120.00 | 1,120.00 | 21.46% |
| Reducing balance, equal installments | 88.85 | 66.19 | 1,066.19 | 12.00% |
| Reducing balance, equal principal | 93.33 | 65.00 | 1,065.00 | 12.00% |
| Interest-only | 10.00 | 120.00 | 1,120.00 | 12.00% |
What the real annual cost includes
The real annual cost shown above is the periodic rate at which the payments repay the cash the borrower received, multiplied by the number of periods in a year. It is the same idea as an annual percentage rate (APR), although the exact legal definition varies by country. For a flat rate loan it is far higher than the quoted rate, and a fee deducted from the loan raises it further, because the borrower repays the full amount but receives less. See deductible vs capitalized loan fees.
Use the calculator to compare offers on the same footing: enter each one, and compare the total repaid and the real annual cost rather than the quoted rate.
Limits of a calculator
A calculator shows the schedule for one loan on the terms you enter. It does not know your day-count convention, grace periods, penalties, early or partial payments, or local rules on disclosure and interest limits. In a real loan book, those all change the balance over time, which is why lenders use loan management software that generates every schedule from the loan product and updates it as payments arrive. See loan servicing and loan amortization schedules.
Frequently asked questions
How do I calculate loan interest?
Pick the method. For reducing balance, multiply the periodic rate by the balance still owed each period. For flat rate, multiply the principal by the annual rate and the term in years. The calculator above does both and shows the schedule.
What is the difference between flat rate and reducing balance?
Flat rate charges interest on the original amount for the whole term. Reducing balance charges interest only on what is still owed, so it costs less at the same quoted rate.
What is the real annual cost shown?
The annualized rate at which the payments repay the cash the borrower receives, including any fee. It is similar to an APR, though legal definitions vary by country.
Can I download the schedule?
Yes. Use the Download schedule (CSV) button to save the full repayment schedule.
Is this calculator a loan offer?
No. It is an illustration and does not account for local disclosure rules, interest limits, penalties or your lender's exact terms.
Related guides and tools
- Flat vs reducing balance calculatorCompare the two on the same quoted rate.
- Loan amortization schedule calculatorBuild and download a full schedule.
- How to calculate loan interestFormulas and worked examples for every method.
- Reducing balance interestDefinition and example.
- Loan origination softwareSet the method per loan product and preview the schedule.
- Effective interest rateThe true annual cost of a loan.
Calculators show one loan. LoanTabs builds the schedule for every loan you make, applies each payment and keeps the books in step.
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