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Add-On Loan Repayment Calculator

Enter your loan principal, add-on annual rate, and repayment period (in years or number of payments) to instantly calculate the monthly payment, total interest, and total repayment. It also back-solves the effective APR so you can see at a glance how far it sits above the quoted rate.

Input

$
%

How to enter the repayment period

yr

Result

Monthly payment (over 36 payments)

$344.44

Total interest

$2,400.00

Total repayment

$12,400.00

Effective APR (estimate)

approx. 14.55 %

The add-on rate is 8.0%, but because the interest does not shrink as you pay down the balance, the true cost of borrowing (effective APR) works out to roughly 14.55%.

How it works

  • The add-on method charges interest up front on the full original principal as 'add-on annual rate x number of years'. Total interest = principal x add-on annual rate / 100 x repayment years.
  • Total repayment = principal + total interest, and the monthly payment = total repayment / number of payments (where the count is 'years x 12' or the figure you enter directly). The repayment period can be entered either by years or by number of payments.
  • Because the interest stays fixed even as the balance is paid down, the true cost of an add-on loan is far higher than the quoted add-on rate. As a rule of thumb, the effective APR is roughly 1.8 to 2 times the add-on rate.
  • The effective APR is estimated by using bisection to find the monthly rate i that satisfies the present-value annuity formula 'principal = monthly payment x (1 - (1+i)^-n) / i', then reporting APR = i x 12 x 100 (%), where n is the number of payments.
  • Real consumer-credit and installment contracts are required to disclose an annual percentage rate, so converting from the add-on rate here is only a guide for understanding how the method works.
  • Note: results are rounded approximations and the effective APR is a numerical estimate. Actual contracts may differ due to fees, rounding, and first-payment adjustments.