What is a Loan Repayments Calculator?

When you take on a loan, whether it be a bank, non-bank lender, credit union or other financial institution, you will be expected to repay the amount you borrow. Typically, these repayments occur on a monthly basis. Many people opt for loan repayments calculators to get an idea of how much their repayments might be. But what is a loan repayments calculator? That’s what we’re going to cover today.

What are loan repayments?

A loan is a type of credit, which means when you take out a loan, whether it be a personal loan, home loan, business loan, etc., you are expected to repay the amount you have borrowed, typically with interest and fees on top.

When it comes to loans, you’re not expected to pay back the amount all at once, but in smaller and manageable instalments. These are known as repayments. Your repayments might be weekly, fortnightly, monthly or quarterly – depending on the type of credit. For loans with terms longer than 30 days, the repayments are often on a monthly basis by default.

Calculating monthly repayments

There are a few things that can affect how much your repayments will be. These include:

• Principal loan amount (the amount you are borrowing excluding interest);
• The interest rate;
• Fees;
• Loan term;
• Repayment schedule.

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All of these ingredients are used to determine your repayments. Whilst the exact formula banks and lenders use to calculate your repayments isn’t publicly available, and each calculation will be unique to your personal situation and loan conditions, repayment calculators can help you get a general idea of what your repayments might look like.

What is a loan repayments calculator?

As the name suggests, a loan repayments calculator allows you to calculate the repayments of your loan. There are many loan calculators out there – banks such as NAB, ANZ, Westpac and more each provide their own loan repayment calculators (personal loans, mortgage and more), and even government organisations such as MoneySmart also have loan repayment calculators.

The purpose of a loan repayments calculator is to give you a general idea of what your repayments could look like if you decide to take on a loan. You will need to input the loan amount, the interest rate, loan term, your repayment frequency and a few other details.

Using the information you have provided, the calculator will provide you with an estimated amount that you will have to repay each week, fortnight or month (depending on the repayment frequency you selected).

Are loan repayments calculators reliable?

Loan repayments calculators are a great tool to give you an idea of what your repayments might look like. But, it is important to highlight that loan repayments calculators are not 100% accurate. 

They do make a lot of assumptions, as they can’t know your specific loan conditions. Therefore, loan repayment calculators provide you with a general idea of what you can expect to pay – but they can’t provide you with your precise repayment schedule.

Different types of loan repayments calculators

You can find different types of loan repayment calculators depending on your needs. MoneySmart, a government financial educational platform, has a repayment calculator for personal loans, mortgages, compound interest and even superannuation.

Many banks also have their own calculators, with mortgages and personal loans being the two of the most common repayments calculators. Here’s a list of some of the repayments calculators you can find:

• Mortgage repayments calculator;
• Personal loan repayments calculator;
• Generic loan repayments calculator (can cover business loans, personal loans, student loans, etc);
• Extra repayments calculator;
• Superannuation calculator;
• Borrowing power calculator.

Who offers loan repayments calculators?

Now we’ve answered the question “what is a loan repayments calculator”, let’s break down who offers loan repayments calculators. We’ve already touched on a few, but here’s a closer look:

• Banks – not just the big four banks in Australia offer loan repayments calculators. Many banks offer a range of different calculators;
• Government organisations – numerous government organisations such as MoneySmart and the Australian Taxation Office (ATO) provide repayments calculators for a range of products;
• Comparison sites – a number of comparison websites also offer their own loan repayments calculators;
• Non-bank lenders – non-bank lenders who also offer Australians loans can have their own repayments calculators to allow you to get an idea of how much your repayments might be.

How can I find out my exact repayments?

Loan repayments calculators can give you a good general idea of what your repayments might look like, but as mentioned above, they can only get you so far. So is there a way you can find out what your exact repayments are?

Unfortunately, the answer is no. There are certain details lenders can’t guarantee in advance, such as the interest rate they are willing to offer you. This is because the interest rate is typically heavily dependent on your personal circumstances and how risky of a borrower you are. Therefore, lenders generally don’t determine the interest rate they will offer you until after you have applied for the loan.

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Because of this, you won’t know what your exact repayments are until you have been approved for the loan. That’s why loan repayments calculators are a great tool to give you a general idea of what you might be looking to repay. But you won’t know for certain until after you have applied for the loan.