Loan Interest Calculator
Enter loan amount, interest rate, and term to calculate monthly payments and total interest.
๐ Complete Guide to Loan Interest Calculator
The Loan Interest Calculator is a free online tool that accurately calculates monthly repayment amounts and total interest costs using two methods: Equal Principal & Interest and Equal Principal repayment. It is useful for planning repayment schedules for various loan products including mortgage loans, lease deposit loans, and personal loans.
Loans are an important financial tool used in modern society for purchasing homes, financing businesses, and supporting education. However, a poorly planned loan can strain household finances for years. Use this calculator to compare monthly payment burdens and total interest by repayment method in advance, and build the optimal loan strategy for your financial situation.
Loans are an important financial tool used in modern society for purchasing homes, financing businesses, and supporting education. However, a poorly planned loan can strain household finances for years. Use this calculator to compare monthly payment burdens and total interest by repayment method in advance, and build the optimal loan strategy for your financial situation.
๐ Key Features
- Compare Equal Principal & Interest vs. Equal Principal repayment
- Detailed yearly repayment schedule provided
- Automatic calculation of total interest and total repayment amount
- Set loan term in years or months
- Simulate various interest rate scenarios
๐ก Use Cases
- Pre-calculate monthly mortgage repayment amounts
- Check interest burden for lease deposit loans
- Plan personal loan repayment schedules
- Compare total interest between Equal Principal & Interest vs. Equal Principal
- Check how monthly payments change with different loan terms
๐ Understanding Loan Repayment Methods
Equal Principal & Interest repayment means paying the same total amount (principal + interest) every month throughout the loan term. Initially, the interest portion is higher, and over time the principal portion increases. Since you pay the same amount monthly, household budget management is convenient, but total interest is higher than Equal Principal repayment.
Equal Principal repayment means paying the same principal amount each month plus interest on the remaining balance. Initial payments are higher but decrease over time, and total interest costs are lower than Equal Principal & Interest. If you have financial flexibility, Equal Principal repayment is more economical.
Bullet repayment (interest-only) means paying only interest during the loan term and repaying the full principal at maturity. Monthly burden is lowest but requires a lump sum at maturity, and total interest is highest. Commonly used for lease deposit loans and corporate working capital loans.
Equal Principal repayment means paying the same principal amount each month plus interest on the remaining balance. Initial payments are higher but decrease over time, and total interest costs are lower than Equal Principal & Interest. If you have financial flexibility, Equal Principal repayment is more economical.
Bullet repayment (interest-only) means paying only interest during the loan term and repaying the full principal at maturity. Monthly burden is lowest but requires a lump sum at maturity, and total interest is highest. Commonly used for lease deposit loans and corporate working capital loans.
๐ Repayment Method Comparison (KRW 300M, 3.5%, 30 Years)
Comparing three repayment methods with a loan of KRW 300 million, annual rate of 3.5%, and a term of 30 years (360 months).
Equal Principal & Interest Repayment
Monthly payment: approx. KRW 1,346,500 (fixed throughout)
Total repayment: approx. KRW 484.74 million
Total interest: approx. KRW 184.74 million
Note: In the early months, approximately 87% of the monthly payment goes toward interest and only 13% toward principal.
Equal Principal Repayment
First month payment: approx. KRW 1,671,500
Last month payment: approx. KRW 836,000
Total repayment: approx. KRW 457.62 million
Total interest: approx. KRW 157.62 million
Note: Saves approximately KRW 27.12 million in interest compared to Equal Principal & Interest. Initial burden is higher but decreases over time.
Bullet Repayment (Interest-only)
Monthly interest payment: approx. KRW 875,000 (fixed for 30 years)
Lump-sum principal at maturity: KRW 300 million
Total repayment: approx. KRW 615 million
Total interest: approx. KRW 315 million
Note: Lowest monthly burden but total interest is approximately KRW 130.26 million more than Equal Principal & Interest. A plan to accumulate the principal at maturity is essential.
Conclusion: Choose Equal Principal to minimize total interest, Equal Principal & Interest for stable budget management, or Bullet Repayment to maximize monthly cash flow.
Equal Principal & Interest Repayment
Monthly payment: approx. KRW 1,346,500 (fixed throughout)
Total repayment: approx. KRW 484.74 million
Total interest: approx. KRW 184.74 million
Note: In the early months, approximately 87% of the monthly payment goes toward interest and only 13% toward principal.
Equal Principal Repayment
First month payment: approx. KRW 1,671,500
Last month payment: approx. KRW 836,000
Total repayment: approx. KRW 457.62 million
Total interest: approx. KRW 157.62 million
Note: Saves approximately KRW 27.12 million in interest compared to Equal Principal & Interest. Initial burden is higher but decreases over time.
Bullet Repayment (Interest-only)
Monthly interest payment: approx. KRW 875,000 (fixed for 30 years)
Lump-sum principal at maturity: KRW 300 million
Total repayment: approx. KRW 615 million
Total interest: approx. KRW 315 million
Note: Lowest monthly burden but total interest is approximately KRW 130.26 million more than Equal Principal & Interest. A plan to accumulate the principal at maturity is essential.
Conclusion: Choose Equal Principal to minimize total interest, Equal Principal & Interest for stable budget management, or Bullet Repayment to maximize monthly cash flow.
๐ฐ Prepayment Strategies and Fees
Prepayment refers to repaying part or all of the principal before the loan maturity date. The interest savings can be significant, but timing and fees must be carefully considered.
Prepayment Fees
Most financial institutions charge a prepayment fee of 1.0~1.5% of the remaining principal for early repayment within the first 3 years of the loan. After 3 years, the fee is often waived. Some internet-only banks (Kakao Bank, Toss Bank, etc.) offer fee-free or reduced-fee prepayment.
Partial vs. Full Prepayment
Partial prepayment allows you to pay down a portion whenever surplus funds become available, with the choice to shorten the loan term or reduce monthly payments. For example, making a partial prepayment of KRW 50 million at year 5 on a KRW 300M loan (3.5%, 30 years) can save approximately KRW 48 million in total interest.
Optimal Prepayment Timing
For Equal Principal & Interest loans, the interest portion is highest in the early years, so prepayment has the greatest impact in years 1-5. In the latter stages of the loan, most interest has already been paid, reducing the prepayment benefit. Prepaying immediately after the fee-free period (after year 3) is a rational approach.
Prepayment vs. Investment
If an investment opportunity with a higher expected return than your loan rate exists, investing may be more beneficial than prepaying. For example, if your loan rate is 3.5% but your expected investment return is 6%, investing is more advantageous. However, always factor in investment risk.
Prepayment Fees
Most financial institutions charge a prepayment fee of 1.0~1.5% of the remaining principal for early repayment within the first 3 years of the loan. After 3 years, the fee is often waived. Some internet-only banks (Kakao Bank, Toss Bank, etc.) offer fee-free or reduced-fee prepayment.
Partial vs. Full Prepayment
Partial prepayment allows you to pay down a portion whenever surplus funds become available, with the choice to shorten the loan term or reduce monthly payments. For example, making a partial prepayment of KRW 50 million at year 5 on a KRW 300M loan (3.5%, 30 years) can save approximately KRW 48 million in total interest.
Optimal Prepayment Timing
For Equal Principal & Interest loans, the interest portion is highest in the early years, so prepayment has the greatest impact in years 1-5. In the latter stages of the loan, most interest has already been paid, reducing the prepayment benefit. Prepaying immediately after the fee-free period (after year 3) is a rational approach.
Prepayment vs. Investment
If an investment opportunity with a higher expected return than your loan rate exists, investing may be more beneficial than prepaying. For example, if your loan rate is 3.5% but your expected investment return is 6%, investing is more advantageous. However, always factor in investment risk.
๐ฆ Types of Loan Products
- Mortgage Loan: A loan secured by real estate, offering lower interest rates and higher borrowing limits. Subject to LTV (Loan-to-Value), DTI (Debt-to-Income), and DSR (Debt Service Ratio) regulations. Major bank rates in 2026 are approximately 3.0~5.5% per annum.
- Lease Deposit Loan (Jeonse): A loan to cover the Korean jeonse (lump-sum rental deposit), typically guaranteed by HUG (Korea Housing Finance Corporation) or SGI Seoul Guarantee Insurance. Usually structured as bullet repayment, with rates of approximately 2.5~4.5% per annum. Up to 80% of the deposit amount can be borrowed.
- Personal Credit Loan: An unsecured loan based on credit score, with a borrowing limit of approximately 100~200% of annual income. Interest rates range from 4~15% per annum, higher than secured loans. Primarily used for short-term financing of 1~5 years.
- Student Loan: The Income Contingent Loan (ICL) from the Korea Student Aid Foundation is a representative example. With a low rate of approximately 1.7% (2026), repayment begins after employment when income is generated. Divided into living expenses and tuition loans.
- Auto Loan: A loan for purchasing a vehicle, secured by the car itself. Available through capital companies, banks, and manufacturer financing. Interest rates range from 3~8% per annum. Typically repaid over 3~7 years using the Equal Principal & Interest method.
๐ Interest Rate Trends and Fixed vs. Variable Rates
Fixed vs. Variable Rates
Fixed rates remain constant throughout the loan term, keeping monthly payments stable. They are advantageous during rising rate environments and especially important for long-term loans. Variable rates are periodically adjusted (usually every 3~6 months) based on a benchmark rate. Favorable during rate decreases but burdensome when rates rise.
Loan Rate Structure: Benchmark Rate + Spread
Loan rate = Benchmark rate (COFIX or CD rate) + Spread (add-on margin) - preferential discount
COFIX (Cost of Funds Index) is the primary benchmark for Korean bank loans, available as new issuance or outstanding balance basis. The spread is determined by the borrower's credit profile, collateral type, and loan term.
South Korea Base Rate Trends 2024~2026
The Bank of Korea entered a rate-cutting cycle in the second half of 2024 after aggressive hikes from 0.5% to 3.5% in 2022~2023. The rate was cut to 3.25% in October 2024 and 3.0% in November 2024. In 2025 it was maintained at 2.5~3.0%, and the 2026 outlook is approximately 2.5% depending on economic conditions.
US Federal Reserve Rate Trends
The US Fed peaked at 5.25~5.50% in July 2023, then began cutting rates in the second half of 2024, reaching 4.00~4.25% by end of 2025. US rate trends indirectly affect Korean loan rates through foreign currency funding costs and exchange rates.
Japan Rate Trends
Japan made modest rate increases in 2024~2025 after a prolonged zero-rate policy, maintaining 0.25~0.5%. Further hikes remain possible due to yen weakness and import price pressures.
Loan Rate Selection Strategy
For long-term loans over 10 years, fixed rates are safer to hedge risk. For short-term (under 3 years) with expected rate declines, variable rates may be advantageous. Hybrid rates (fixed for the first 3~5 years, then variable) are also widely used.
Fixed rates remain constant throughout the loan term, keeping monthly payments stable. They are advantageous during rising rate environments and especially important for long-term loans. Variable rates are periodically adjusted (usually every 3~6 months) based on a benchmark rate. Favorable during rate decreases but burdensome when rates rise.
Loan Rate Structure: Benchmark Rate + Spread
Loan rate = Benchmark rate (COFIX or CD rate) + Spread (add-on margin) - preferential discount
COFIX (Cost of Funds Index) is the primary benchmark for Korean bank loans, available as new issuance or outstanding balance basis. The spread is determined by the borrower's credit profile, collateral type, and loan term.
South Korea Base Rate Trends 2024~2026
The Bank of Korea entered a rate-cutting cycle in the second half of 2024 after aggressive hikes from 0.5% to 3.5% in 2022~2023. The rate was cut to 3.25% in October 2024 and 3.0% in November 2024. In 2025 it was maintained at 2.5~3.0%, and the 2026 outlook is approximately 2.5% depending on economic conditions.
US Federal Reserve Rate Trends
The US Fed peaked at 5.25~5.50% in July 2023, then began cutting rates in the second half of 2024, reaching 4.00~4.25% by end of 2025. US rate trends indirectly affect Korean loan rates through foreign currency funding costs and exchange rates.
Japan Rate Trends
Japan made modest rate increases in 2024~2025 after a prolonged zero-rate policy, maintaining 0.25~0.5%. Further hikes remain possible due to yen weakness and import price pressures.
Loan Rate Selection Strategy
For long-term loans over 10 years, fixed rates are safer to hedge risk. For short-term (under 3 years) with expected rate declines, variable rates may be advantageous. Hybrid rates (fixed for the first 3~5 years, then variable) are also widely used.
๐ Understanding DTI and DSR
DTI and DSR are lending regulation metrics introduced by financial authorities to prevent excessive household debt. They are the key criteria for determining loan limits and must be thoroughly understood.
DTI (Debt To Income Ratio)
Formula: (Annual principal + interest on the subject mortgage + other debt interest) รท Annual income ร 100
Example: Annual income KRW 60M, mortgage annual principal & interest KRW 15M, other interest KRW 5M
DTI = (15M + 5M) รท 60M ร 100 = 33.3%
The DTI limit in Seoul speculative overheating zones is 40%. A higher DTI increases the likelihood of loan rejection or limit reduction.
DSR (Debt Service Ratio)
Formula: (Total annual principal + interest on all financial debts) รท Annual income ร 100
Unlike DTI, DSR includes principal and interest on all loans, including personal credit loans, card loans, and auto installments.
Example: Annual income KRW 60M, mortgage KRW 15M/yr, personal loan KRW 6M/yr, card loan KRW 3M/yr
DSR = (15M + 6M + 3M) รท 60M ร 100 = 40.0%
2026 DSR regulations: 40% for banking sector, 50% for secondary financial sector. Mandatory for loans exceeding KRW 100 million.
Notes on DSR Calculation
Credit card revolving, overdraft accounts (minus bankbook), student loans, and auto installments are all included. To lower your DSR, paying off small existing loans first is most effective. Check your DSR level before applying for a mortgage to predict eligibility and borrowing limits.
DTI (Debt To Income Ratio)
Formula: (Annual principal + interest on the subject mortgage + other debt interest) รท Annual income ร 100
Example: Annual income KRW 60M, mortgage annual principal & interest KRW 15M, other interest KRW 5M
DTI = (15M + 5M) รท 60M ร 100 = 33.3%
The DTI limit in Seoul speculative overheating zones is 40%. A higher DTI increases the likelihood of loan rejection or limit reduction.
DSR (Debt Service Ratio)
Formula: (Total annual principal + interest on all financial debts) รท Annual income ร 100
Unlike DTI, DSR includes principal and interest on all loans, including personal credit loans, card loans, and auto installments.
Example: Annual income KRW 60M, mortgage KRW 15M/yr, personal loan KRW 6M/yr, card loan KRW 3M/yr
DSR = (15M + 6M + 3M) รท 60M ร 100 = 40.0%
2026 DSR regulations: 40% for banking sector, 50% for secondary financial sector. Mandatory for loans exceeding KRW 100 million.
Notes on DSR Calculation
Credit card revolving, overdraft accounts (minus bankbook), student loans, and auto installments are all included. To lower your DSR, paying off small existing loans first is most effective. Check your DSR level before applying for a mortgage to predict eligibility and borrowing limits.
โ Pre-Loan Checklist
- Have I calculated my DTI and DSR to determine loan eligibility and maximum limit in advance?
- Have I compared fixed and variable rates and chosen the appropriate option for the current rate environment?
- Have I compared Equal Principal & Interest vs. Equal Principal repayment to review total interest and monthly burden?
- Have I confirmed prepayment fee conditions (waiver timing, fee rate)?
- Is the monthly repayment after taking the loan within 30~40% of my monthly take-home pay for the next 3~5 years?
- Do I have emergency funds (at least 3~6 months of living expenses) secured separately before taking the loan?
๐ Related Economics Tools for Loan Calculation
๐น Compound Interest Calculator
The Compound Interest Calculator lets you calculate compound investment returns on surplus funds after loan repayment. Use it to compare your loan rate against expected investment returns to decide whether prepayment or investment is more advantageous.
- Annual/monthly compounding return simulation
- Calculate time needed to reach a target amount
- Compare lump-sum vs. recurring investment
๐ผ Take-home Pay Calculator
Use the Take-home Pay Calculator to determine your monthly take-home pay first, then set an appropriate loan repayment amount. A general rule is to allocate no more than 30~40% of your monthly take-home pay to loan repayments. Build a comfortable loan plan based on your actual take-home amount.
- Automatic calculation of four major insurances, income tax, and local tax
- Tax deduction adjustments based on number of dependents
- View monthly and annual take-home pay simultaneously
Frequently Asked Questions
Equal Principal & Interest keeps your monthly payment the same throughout the loan. Equal Principal has the same principal amount each month, but interest decreases over time, resulting in lower total interest but higher initial payments.
Equal Principal results in less total interest paid. However, since early payments are higher, Equal Principal & Interest is better if you prefer stable monthly expenses.
Prepayment fees vary by financial institution and product. Typically, 1-1.5% of the remaining principal is charged for early repayment within the first 3 years.
This calculator assumes a fixed interest rate. For variable rates, payments may change when the rate adjusts. Use the current rate as a reference.
The borrowable amount depends on your income, credit score, and existing debts. Contact your financial institution for exact amounts.