What does a loan really cost?

Start with the total you will repay

A monthly instalment tells you how a loan fits into a month. The total repayment tells you what it costs over its whole life. You need both numbers before deciding.

Ask for a written quotation for the amount and term you actually want. A starting rate in an advert is not a promise of your personal rate.

Put every part of the price on the page

Our calculator separates these components so you can see what changes the result.

• Amount borrowed: the money you receive.
• Interest: the charge for using the money over time.
• Initiation fee: a once-off charge. If financed, it can also attract interest.
• Service fees: recurring charges over the term.
• Credit life insurance: cover that may be required; the amount and calculation can differ between lenders.

Try the same amount over two terms

In the calculator, leave the amount, rate and fees unchanged. Compare 24 months with 36 months. The longer term generally reduces the monthly payment but increases the interest and the number of monthly fees paid.

For a clean comparison, put written quotes next to each other and use the same amount and term. Check whether insurance and all fees are already included. Nominal interest is not an all-in cost measure.

Check the assumptions

The Fairloan example uses monthly amortisation, a fixed annual nominal rate, a financed initiation fee and fixed monthly fees and insurance. It does not include missed-payment costs or daily interest differences. Real lender calculations may differ.