Quick answer: 50,000 at 7% repaid at 1,000 a month takes 60 payments (5 years) with 9,288.36 in interest; to clear it in exactly 5 years you would pay 990.06 a month.
How it's calculated
The rate per period is the annual rate divided by the number of payments a year (52 weekly, 26 fortnightly, 12 monthly). Each period interest of balance × i is added and the payment is taken off.
Payment needed for n payments: M = P·i ÷ (1 − (1 + i)^−n). Time for a fixed payment: n = −ln(1 − i·P ÷ M) ÷ ln(1 + i), rounded up, with a smaller last payment.
Paying every two weeks half of a monthly payment means 26 half-payments a year, the same as 13 monthly payments, so the loan is cleared sooner. The maths is the same for a fixed profit rate in Islamic finance. For the standard monthly case see the loan payment calculator.
Worked examples
- 50,000 at 7%, 1,000 a month: 60 payments, interest 9,288.36
- 50,000 at 7%, 500 every two weeks: 117 payments (4.5 years), interest 8,329.22
- 50,000 at 7%, 250 a week: 234 payments (4.5 years), interest 8,289.91
Frequently asked questions
Does weekly repayment save interest?
Only a little if you pay the same amount per year: interest is charged on a balance that falls slightly sooner. Most of the saving from fortnightly plans comes from paying one extra month a year.
Does my lender work out interest the same way?
Many lenders charge interest daily and collect it at each payment; the result is very close to dividing the annual rate by the number of payments.
What if the payment is too small?
If the payment does not cover the interest for the period, the balance never falls. The calculator tells you the minimum.
How much do I need to pay to clear it by a set date?
Choose payment needed and enter the time you want. The calculator gives the payment for monthly, fortnightly or weekly schedules.
How do I match my payday?
Choose the payment frequency closest to when you are paid, so the money leaves soon after it arrives.
What is the total interest figure?
All the interest paid until the balance reaches zero. A larger payment reduces it, because less time passes.