How the interest is worked out
Interest is worked out each month on the balance you still owe, at one twelfth of the annual rate. Early payments are mostly interest; as the balance falls, more of each payment repays the loan.
The rate on a loan against a fixed deposit is usually linked to the rate the deposit earns. Enter the loan rate from your bank, not the deposit rate.
Lenders may calculate interest differently (some charge it daily), so your actual interest can differ slightly.
Worked example
Borrowing £10,000 at 6% over 12 months costs £327.97 in interest, 3.3% of the amount borrowed, with a monthly payment of £860.66.
Over 6 months the interest falls to £175.73, with a payment of £1,695.95. At 5% over 12 months, the interest would be £272.90.
Comparing the cost
Set the interest on the loan against what you'd give up by closing the deposit early, including any penalty and lost interest. Your deposit usually keeps earning interest while it secures the loan, so check both rates with your bank.
Inputs for the FD against loan interest rate calculator
Amount to borrow
The amount you want to borrow against your deposit.
Interest rate (per year)
The annual interest rate on the loan, not the rate your deposit earns. The rate shown is only an example, so enter the rate from your quote.
Term
How many months you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Loan against FD interest rate calculator questions
How much interest will I pay on a loan against my FD?
Enter your details above. For example, £10,000 at 6% over 12 months costs £327.97.
Is the loan rate the same as my deposit rate?
Usually not. Banks set their own loan rate, so check it with yours.
Does repaying faster save interest?
Yes. In the example, 6 months instead of 12 saves £152.24.
What's the difference between the interest rate and the APR?
The interest rate is what's charged on the balance. The APR also includes most compulsory fees, so it's better for comparing the overall cost of different loans.