Loan Amortization Calculator

Understanding Business Loan Amortisation in Australia

An amortisation schedule breaks down every repayment into its interest and principal components over the full life of the loan. In the early periods, the majority of each payment goes toward interest — because interest is calculated on the full outstanding balance. As the principal reduces, less interest accrues each period and more of each payment chips away at the balance. This front-loading of interest is why making extra repayments in the first year or two of a loan has a disproportionately large effect on total interest paid and the loan's payoff date.

Australian businesses access credit through several structures — term loans, commercial bills, equipment finance (chattel mortgage or finance lease), and unsecured business loans. Each has different amortisation characteristics. A standard term loan amortises fully over the loan term. A commercial bill or balloon loan may have a large residual payment at the end, meaning repayments are lower during the term but there is a significant lump sum due at maturity. Understanding your amortisation schedule upfront helps you budget for repayments and avoid surprises at refinance time.

Interest on business loans is generally tax-deductible in Australia where the borrowed funds are used for income-producing purposes. The deduction is for the interest component of each repayment — the principal portion is not deductible. For loans used partly for business and partly for private purposes, only the business-use proportion of interest is deductible. Always confirm deductibility and the correct treatment of establishment fees with your accountant before lodging.

How to use this calculator

1. Enter the loan amount (principal) in AU$.
2. Enter the annual interest rate — use the rate from your loan contract, not the comparison rate.
3. Set the loan term in years and your repayment frequency (monthly, fortnightly, or weekly).
4. Review the repayment amount, total interest payable, and the full amortisation schedule.

What is the difference between the interest rate and the comparison rate?

The interest rate is used to calculate your periodic interest charge. The comparison rate includes fees (such as establishment fees and monthly account-keeping fees) expressed as an annual percentage — it gives a better picture of the true cost of the loan. For amortisation calculations, use the stated interest rate. To compare loan options, use the comparison rate. Under the National Consumer Credit Protection Act, lenders must disclose both for consumer credit products.

Does paying fortnightly instead of monthly reduce total interest?

Yes — but only if you are making 26 fortnightly payments per year rather than simply halving your monthly payment. Because there are 26 fortnights in a year (vs 12 months), you effectively make one extra monthly payment per year. This reduces the principal faster and can shave months off the loan term and reduce total interest meaningfully on a 5–7 year business loan.

How do extra repayments affect the amortisation schedule?

Every dollar of extra principal repayment reduces the balance that interest is calculated on in all future periods. Because interest is front-loaded, an extra AU$5,000 repayment in year one reduces total interest by more than the same repayment in year four. Check your loan contract for any prepayment restrictions or break costs before making large extra repayments — these are common on fixed-rate business loans.