Finance tool
What the loan really costs you.
Monthly payment, total interest over the term, and how much of the first year goes on interest rather than the balance — the figure lenders quote least often.
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Loan repayment calculator
FreeWorth knowing
Reading a loan properly.
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01
Early payments are mostly interest
Amortisation charges interest on the outstanding balance, which is at its largest on day one. On a five-year loan a substantial share of the first year goes on interest rather than reducing what you owe — which is why paying a loan off early saves less than people expect near the end, and far more than they expect at the start.
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02
A longer term lowers the payment and raises the cost
Stretching the same borrowing from three years to seven makes each month easier and the total markedly more expensive. Both facts are true at once. Choose the shortest term whose payment you can service comfortably in a bad month, not an average one.
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03
The advertised rate is not the whole price
Arrangement fees, insurance requirements and early-repayment charges sit outside the interest rate. Ask for the APR, which folds compulsory fees in, and read what happens if you repay early — some lenders price that penalty to recover the interest you would have saved.
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