How personal loan repayments are worked out
Most personal loans are repaid in equal instalments over one to seven years. Each repayment covers the interest charged on the balance since the last repayment, and the rest reduces the balance. The repayment comes from the amortisation formula M = P × r ÷ (1 − (1 + r)−n): P is the amount borrowed (plus any fee added to the loan), r is the rate per repayment period and n is the number of repayments. The calculator runs it at the frequency you choose and adds any monthly fee on top.
The rate you're offered may not be the advertised one. Moneysmart notes lenders look at your credit score, income, expenses and savings when they set your rate, so use the rate from your quote. The RBA's averages give a sense of what borrowers actually pay:
| Loan amount | 8.22% | 9.40% | 10.48% | 15.00% | 20.00% |
|---|---|---|---|---|---|
| $5,000 | $102 | $105 | $107 | $119 | $132 |
| $10,000 | $204 | $210 | $215 | $238 | $265 |
| $15,000 | $306 | $314 | $322 | $357 | $397 |
| $20,000 | $408 | $419 | $430 | $476 | $530 |
| $30,000 | $611 | $629 | $645 | $714 | $795 |
| $50,000 | $1,019 | $1,048 | $1,074 | $1,189 | $1,325 |
Shorter or longer term?
Stretching a loan lowers the repayment but adds interest, sometimes a lot. It also keeps you in debt for longer, which matters if you'll want to borrow for something else, such as a home, while it's running. Moneysmart's guidance: shorter terms can mean less interest overall; longer terms may lower repayments but increase the total cost.
| Term | Monthly repayment | Total interest |
|---|---|---|
| 1 year | $1,753 | $1,033 |
| 2 years | $917 | $2,017 |
| 3 years | $640 | $3,030 |
| 4 years | $502 | $4,072 |
| 5 years | $419 | $5,144 |
| 7 years | $326 | $7,372 |
Comparing two offers: why the lowest rate isn't always cheapest
Fees can turn a low rate into an expensive loan. In the example below, Loan A has the lower interest rate but costs more because of its establishment and monthly fees. Loan B's slightly higher rate comes out $640 cheaper over 5 years. Moneysmart makes the same point with its own example, where a loan with a lower interest rate has the higher comparison rate.
| Loan A | Loan B | |
|---|---|---|
| Interest rate | 9.50% | 10.50% |
| Fees | $500 establishment + $10 a month | None |
| Monthly repayment (plus fees) | $430.54 + $10 | $429.88 |
| Total interest and fees | $6,432 | $5,793 |
| Cost including fees (annual rate) | 11.57% | 10.50% |
What the comparison rate does and doesn't tell you
A lender that advertises an interest rate must also show a comparison rate, which combines the rate with the fees known when the loan is advertised. It's calculated on one of six legislated examples ($250 over 2 weeks, $1,000 over 6 months, $2,500 over 2 years, $10,000 over 3 years, $30,000 over 5 years, $150,000 over 25 years), choosing the one closest to the lender's typical loan, and for the $10,000 and $30,000 examples the ad must say whether the rate is for a secured or unsecured loan. Government fees and fees that may never be charged, such as early repayment and late fees, are left out.
So compare comparison rates on the same example, then check your own loan. If you're borrowing $5,000 or $50,000 rather than the example amount, the calculator's "cost including fees" figure is the fairer comparison.
Paying off a personal loan early
Extra repayments cut the interest you pay, but check the contract first. Moneysmart notes fixed-rate loans may charge a fee if you repay early, while variable-rate loans often let you make extra repayments or pay out the loan without one. If you expect a lump sum, such as a tax refund or bonus, a loan without early repayment fees can be worth a slightly higher rate.
Before you borrow
- For up to $2,000 for essentials, a No Interest Loan has no interest or fees if you meet the criteria. See loans with bad credit.
- For short-term spending you can clear within weeks, a credit card's interest-free days or buy now pay later may cost nothing, but standard card rates averaged 20.99% in August 2026 once interest applies.
- Borrowing to clear other debts? Read debt consolidation first, and run the new loan through this calculator.
- Struggling with the repayments you already have? Call the National Debt Helpline on 1800 007 007 before taking on more credit.
Our personal loans guide explains fixed versus variable, secured versus unsecured and how applying affects your credit report.
Frequently asked questions
How much would a $20,000 loan cost per month?
About $419 a month over 5 years at 9.40%, the RBA's average rate on new personal fixed-term loans in July 2026, or $640 over 3 years. Total interest over 5 years is about $5,144, before fees.
How much would a $30,000 personal loan cost a month?
About $629 a month over 5 years at 9.40%, or $645 at 10.48% (the average fixed rate). Total interest at 9.40% is about $7,715.
What are the repayments on a $10,000 personal loan?
About $320 a month over 3 years at 9.40%, with $1,515 in interest. Over 5 years it's about $210 a month.
How is interest on a personal loan calculated?
Interest is charged on the balance you still owe, so it falls as you repay. Each repayment covers the interest charged since the last one plus some of the principal. The calculator uses the standard amortisation formula at the repayment frequency you choose.
Is a shorter or longer personal loan better?
A shorter term costs less in total but has higher repayments. On $20,000 at 9.40%, 3 years costs about $3,030 in interest and 7 years about $7,372. Choose the shortest term you can comfortably afford.
Does the comparison rate include all fees?
It includes the fees you know about when the loan is advertised, such as establishment and monthly fees. It leaves out government charges and fees that may never happen, like early repayment and late fees, and it's only exact for the example amount and term the lender used.
