More repayments means less interest, because of the effects of compounding, so weekly repayments will save you some money. Which one you choose will depend on your budgeting style. On many loans, you’ll have the option to make repayments weekly, fortnightly or monthly. $413 each month, adding up to $4,765 in interest over 5 years.$634 each month, adding up to $2,812 in interest over 3 years, or.Longer terms will lower monthly repayments, but cost more in interest over the life of the loan.įor example, our personal loan repayment calculator shows that on a loan of $20,000 at 8.75% p.a. How long will you be repaying your loan? Shorter loan terms will generally mean higher repayments, but less interest in the long run.
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Mozo also has some great, free resources to help you straighten out just how much you can borrow, like our:
To work it out, consider your budget on all levels – yearly, monthly and weekly – and think about any life changes you might encounter, like having kids or moving house. But it’s not as simple as deciding how much you want – you should really be focusing on how much you can realistically afford to pay back. This is the amount you’re looking to borrow. All of these things should be freely available to you before you take on the loan, and it’s a good idea to know them all, even if you’re not trying to calculate interest. You’ll need to know a few basic facts about your loan before calculating how much interest you’ll pay. Factors that affect how much interest you pay Usually the repayments you make on a loan will be made up of two parts: the part that reduces your balance to pay off your loan, and the part that covers the interest on the loan. It’s how lenders make profit from giving out loans – after all, they’re not in it out of the goodness of their hearts.
But what do we mean by that?Įssentially, interest is a fee you pay for using someone else’s (usually the bank’s) money. When you take out a loan, whether it’s a car loan, home loan or amount on a credit card, you’ll have to pay back both the amount you borrowed and interest on top of it.
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