How Loan Interest Works - Monthly Payment & Total Cost

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How the monthly payment is set

Most personal, car and home loans are amortising: the same payment every month, calculated so the loan is fully repaid by the end of the term. Early payments are mostly interest; later ones mostly repay the balance.

Term vs total cost

A longer term lowers the monthly payment but raises total interest. $25,000 at 7.5% costs about $501 a month over 5 years ($5,057 interest) versus about $346 over 10 years ($16,612 interest).

Compare offers properly

Look at the APR (which includes most fees), the total amount repaid, and any early-repayment penalties – not just the monthly payment. The Loan Calculator shows monthly payment, total paid and total interest side by side.

Ways to pay less

A bigger down payment, a shorter term, improving your credit before applying, and extra payments toward the principal (check there's no penalty).

Frequently asked questions

What is APR?

The annual cost of borrowing including interest and most fees.

Is this financial advice?

No – it's general information; speak to a licensed adviser for your situation.

What is EMI?

Equated Monthly Instalment – the fixed monthly loan payment.