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<p>Before borrowing any <a href="https://www.planto.hk/en/blog/personal-loan-APR-comparison/">personal loan</a>, you must clearly understand the borrowing costs. Planto has created a simple personal loan interest rate and repayment calculator that can calculate your monthly repayment amount and total interest expense by simply entering the loan amount, repayment period, and actual annual percentage rate (APR).</p>



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<h2>Explanation of Personal Loan Calculator Terminology</h2>



<h3>Loan Amount</h3>



<p>The loan amount refers to the total amount of money borrowed by the borrower from the lending institution. The lending institution will determine the amount of loan to be approved based on various factors such as the borrower&#8217;s income, credit history, occupation, and more. Deciding the loan amount based on personal needs and repayment capability is essential when borrowing money.</p>



<h3>Actual Annual Percentage Rate (APR)</h3>



<p>The actual annual percentage rate is a loan interest rate calculation method designated by the Hong Kong Association of Banks. It reflects the final rate obtained after calculating interest, handling fees, and all other costs. When all other conditions are the same, the lower the actual annual percentage rate, the lower the borrower&#8217;s loan interest expense.</p>



<p>Most banks and financial companies do not charge handling fees and finance charges to personal installment loan applicants. Therefore, interest expense is the main cost of borrowing a personal loan, and it is crucial to consider the actual annual percentage rate when choosing a loan.</p>



<h3>Tenor</h3>



<p>Most personal installment loans in Hong Kong require borrowers to repay monthly, which can last up to 60 months or more. A more extended tenor means lower monthly payments but higher interest costs in the long run. Conversely, the shorter tenor, the higher the monthly payments, but the lower the total interest costs.</p>



<h3>Monthly Repayment</h3>



<p>The monthly repayment refers to the principal and interest that the borrower pays to the lending institution each month. The lending institution uses the &#8220;78 Law&#8221; to determine the ratio of principal and interest in the repayment amount. Although the monthly repayment amount of an installment loan is fixed, the ratio of principal and interest will gradually change, with interest accounting for a higher proportion in the early stages of repayment and principal accounting for less. As the repayment progresses, the interest ratio in the repayment amount will decrease.</p>



<h3>Total Interest Expenses</h3>



<p>Total interest expenses refer to the actual monthly interest paid over the entire repayment period. Assuming that the loan amount and repayment term remain the same, the higher APR, the more total interest expenses will be paid.</p>



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<h2>FAQs about Personal Loan Calculators</h2>



<div class="schema-faq wp-block-yoast-faq-block"><div class="schema-faq-section" id="faq-question-1678935651203"><strong class="schema-faq-question">Are there any other costs besides interest when borrowing a personal loan?</strong> <p class="schema-faq-answer">Interest expense is the main cost of a personal loan. In addition, lending institutions may charge administrative and financial fees such as handling fees, late payment penalties, and prepayment fees based on the nature of the product and the individual borrower&#8217;s loan conditions.</p> </div> <div class="schema-faq-section" id="faq-question-1678935666490"><strong class="schema-faq-question">Why do the results of personal loan calculators differ from the repayment plans offered by lending institutions?</strong> <p class="schema-faq-answer">Planto&#8217;s personal loan calculator calculates the interest rate based on the APR, while some lending institutions may include cash rebates or other discounts and loan costs in their APR, resulting in different results. Borrowers should rely on the final terms and information provided by the lending institution.</p> </div> </div>


Interest expense is the main cost of a personal loan. In addition, lending institutions may charge administrative and financial fees such as handling fees, late payment penalties, and prepayment fees based on the nature of the product and the individual borrower's loan conditions.

Are there any other costs besides interest when borrowing a personal loan?

Planto's personal loan calculator calculates the interest rate based on the APR, while some lending institutions may include cash rebates or other discounts and loan costs in their APR, resulting in different results. Borrowers should rely on the final terms and information provided by the lending institution.

Why do the results of personal loan calculators differ from the repayment plans offered by lending institutions?

Planto has created a simple personal loan interest rate and repayment calculator that can calculate your monthly repayment amount and total interest expense by simply entering the loan amount, repayment period, and actual annual percentage rate (APR).

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