How this calculator works
The loan is repaid in equal payments over the term. Each payment first covers interest on the remaining balance and then reduces the principal, so the share going to interest falls over time. The nominal annual rate is divided by the number of payments a year to get the periodic rate. The term is converted to a whole number of payments, rounded to the nearest payment. Total cost adds the upfront arrangement fee, which is not part of the quoted rate, to the interest charged. The quoted nominal rate is not an APR and does not by itself include fees.
Formula
Periods per year: 12 monthly, 26 bi-weekly, 52 weekly or 4 quarterly. Periodic rate = nominal annual rate / periods per year. Payment = P × r / (1 - (1 + r)^-n), where P is the amount, r the periodic rate and n the number of payments; when r is zero the payment is P / n. Total interest = payment × n - P.
Worked example
A $50,000 loan at 8% nominal over five years paid monthly has r = 0.08 / 12 = 0.006667 and n = 60. The payment is $1,013.82, total payments are $60,829.18 and interest is $10,829.18. A $500 arrangement fee brings the full cost to $11,329.18.
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Frequently asked questions
Does this calculate APR?
No. It uses the nominal rate and treats the fee separately. APR folds fees into a single annual rate and is useful for comparing offers; a lender must disclose it under Canadian cost-of-borrowing rules for many consumer and small business products.
Why is my payment slightly different from the bank's?
Banks may compound interest more often than they charge payments, use a different day-count convention, round each payment or charge the first payment at a different date. Small differences are normal. Trust the lender's disclosure document for the binding figure.
What happens with a zero interest rate?
The payment is simply the loan amount divided by the number of payments, and total interest is zero. The fee still adds to the total cost.