How loan interest works
Loan interest is the cost of borrowing. On a standard amortising loan, each scheduled payment is made up of interest plus a portion that reduces the amount still owed.
How the balance changes
Interest for a period is calculated from the outstanding balance and the applicable periodic rate. The rest of the payment reduces principal. As the balance falls, the interest portion can fall as well.
Why rate and term both matter
A higher rate increases the interest charged for a given balance. A longer term spreads repayment over more periods, which can reduce the periodic payment but may increase total interest paid.
Example
Suppose a loan starts at R50 000 with an annual rate of 18.5% over 36 months. A calculator can estimate a level monthly payment and then show how each payment is divided between interest and principal.
What can change the actual result?
Fees, payment timing, rate changes, different interest conventions and product-specific terms can change the amount you actually pay. Use the agreement for the authoritative terms.
Source and methodologyThe examples on this page use standard mathematical loan calculations. ToolZeroo does not present them as lender offers or approvals.
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Browse ToolZeroo Finance calculators →Information on this page is general and educational. Check the actual terms, rates and rules that apply to you.