How Long Will It Take to Repay Your Loan?

Taking out a loan can be a great way to finance a major purchase or investment. However, it’s important to understand how long it will take to repay the loan before you sign on the dotted line. The length of your repayment period will depend on a number of factors, including the loan amount, interest rate, and term.

This article walk you through the loan repayment process and show you how to calculate your repayment period. We’ll also provide some tips on how to shorten your repayment period and save money on interest.

How Long Does it Take to Pay Off a Loan?

The length of time it takes to pay off a loan depends on a number of factors, including the loan amount, interest rate, and term.

  • Loan amount: The larger the loan amount, the longer it will take to pay off. For example, a $20,000 loan with a 6% interest rate and a 10-year term will take 10 years to pay off.
  • Interest rate: The higher the interest rate, the longer it will take to pay off the loan and the more interest you will pay overall. For example, a $20,000 loan with a 10% interest rate and a 10-year term will take 12 years to pay off, and you will pay an additional $2,000 in interest.
  • Term: The term of the loan is the length of time you have to repay the loan. Longer terms have lower monthly payments, but you will pay more interest overall. For example, a $20,000 loan with a 6% interest rate and a 10-year term will take 10 years to pay off and you will pay $2,000 in interest. A $20,000 loan with a 6% interest rate and a 20-year term will take 20 years to pay off and you will pay $4,000 in interest.

The length of time to pay off a loan can vary significantly depending on the loan amount, interest rate, and term. If you want to pay off your loan as quickly as possible, you can choose a shorter term or make extra payments each month.

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Factors Affecting Loan Repayment Period

It is important to consider factors when calculating your loan repayment period. here are some factors that affect loan repayment period in Australia:

  • Loan amount: The larger your loan amount, the longer it will take to repay the loan.
  • Interest rate: The higher your interest rate, the longer it will take to repay the loan and the more interest you will pay overall.
  • Term: The term of the loan is the length of time you have to repay the loan. Longer terms have lower monthly payments, but you will pay more interest overall.
  • Extra payments: If you make extra payments on your loan, you can shorten the term of the loan and save money on interest.
  • Prepayment penalties: Some loans have prepayment penalties, which means you will have to pay a fee if you pay off your loan early.
  • Your income: The amount of money you earn each month will affect how much you can afford to pay towards your loan each month.
  • Your expenses: The amount of money you spend each month on other expenses, such as rent, bills, and groceries, will also affect how much you can afford to pay towards your loan each month.
  • Your credit score: Your credit score can affect the interest rate you are offered on your loan. A higher credit score will typically lead to a lower interest rate, which can save you money on interest over the life of your loan.

How to Calculate Your Loan Repayment Period

There are a few ways to calculate your loan repayment period. One way is to use the following formula: Loan repayment period = (loan amount * interest rate) / (monthly payment – interest)

For example, if you have a $20,000 loan with an interest rate of 6% and a monthly payment of $400, your loan repayment period would be: (20,000 * 0.06) / (400 – 0.06 * 20,000) = 10 years

Fortunately, we have an easier way for you to calculate your loan repayment period. You can simply use our Monthly Mortgage Repayment Calculator, which can help you estimate your monthly mortgage repayment.

Tips on How to Shorten Your Loan Repayment Period

If you are struggling to repay your loan, here are some tips on how to shorten your loan repayment period:

Make a down payment: The larger your down payment, the lower your loan amount will be, which will shorten your repayment period and save you money on interest.

  • Shop around for the best interest rate: Compare interest rates from different lenders before you take out a loan.
  • Consider a shorter-term loan: A shorter-term loan will have higher monthly payments, but you will pay less interest overall.
  • Make extra payments: If you can afford to make extra payments on your loan, you can shorten the term of the loan and save money on interest.
  • Refinance your loan: If your interest rate has increased since you took out your loan, you may be able to refinance your loan at a lower interest rate. This could save you money on your monthly payments.
  • Make biweekly payments: Instead of making monthly payments, consider making biweekly payments. This will effectively pay your loan off 13 months early.
  • Pay off high-interest debt first: If you have multiple loans, focus on paying off the ones with the highest interest rates first. This will save you the most money in interest over time.
  • Live below your means: If you can reduce your expenses, you will have more money available to put towards your loan payments. This will help you shorten your repayment period and save money on interest.

How to Save Money on Interest

Saving money on interest can help you reduce the overall cost of borrowing and free up funds for other financial goals. Here are some tips on how to save money on interest:

  • Improve Your Credit Score: A higher credit score can make you eligible for lower interest rates. Pay your bills on time, keep credit card balances low, and manage your credit responsibly to improve your creditworthiness.
  • Shop Around for the Best Rates: Before committing to a loan or credit card, compare interest rates from different lenders or financial institutions. Even a small difference in interest rates can result in significant savings over the loan term.
  • Make Extra Payments: By paying more than the minimum required payment each month, you can reduce the principal balance faster and shorten the loan term. This leads to less interest being charged over time.
  • Consider Biweekly Payments: Instead of making monthly payments, consider switching to biweekly payments. By doing so, you effectively make 13 full payments in a year instead of 12, which can accelerate the repayment process and reduce interest charges.
  • Refinance Your Loans: If interest rates have decreased since you initially obtained your loan, you may consider refinancing. This involves replacing your existing loan with a new one at a lower interest rate, potentially reducing your monthly payments and saving on interest costs.
  • Pay Off High-Interest Debt First: If you have multiple loans or credit cards, prioritize paying off the ones with the highest interest rates first. By eliminating high-interest debt sooner, you can save money that would otherwise be spent on interest charges.
  • Negotiate with Lenders: In some cases, you may be able to negotiate a lower interest rate with your lender, especially if you have a good repayment history or if you can provide valid reasons for a rate reduction.
  • Avoid Late Payments: Late payments can lead to additional fees and higher interest rates. Make it a priority to pay your bills on time to avoid unnecessary costs.
  • Consolidate Debt: If you have multiple debts with varying interest rates, consolidating them into a single loan with a lower interest rate can simplify your payments and potentially reduce your overall interest expenses.
  • Pay Attention to Promotional Offers: Some lenders or credit card issuers may offer promotional interest rates for a limited period. Take advantage of these offers but ensure you understand the terms and any potential changes in interest rates after the promotional period ends.

It is important to note that these are just some tips, and your specific situation may vary.

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Contact Odin Mortgage now to take the first step towards owning your dream home.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Frequently asked questions

The length of time it takes to repay a loan is affected by three main factors:

  • The loan amount: The larger the loan amount, the longer it will take to repay.
  • The interest rate: A higher interest rate will mean that you will pay more interest over the life of the loan, which will also extend the repayment period.
  • The repayment terms: The repayment terms will specify how long you have to repay the loan, such as 10 years, 15 years, or 30 years.

There are a few things you can do to shorten the repayment period of your loan:

  • Make a down payment: The larger your down payment, the smaller your loan amount will be, which will shorten the repayment period.
  • Shop around for the best interest rate: Interest rates can vary from lender to lender, so it is important to shop around and compare rates before you choose a loan.
  • Make extra payments: If you can afford to make extra payments on your loan, you can shorten the repayment period.
  • Refinance your loan: If your interest rate has increased since you took out your loan, you may be able to refinance your loan at a lower interest rate. This could save you money on your monthly payments and shorten the repayment period.

If you can’t afford to make the monthly payments on your loan, you may have a few options:

  • Contact your lender: Your lender may be willing to work with you to create a payment plan that you can afford.
  • Consider a deferment or forbearance: A deferment is a temporary pause in your payments, while a forbearance allows you to temporarily reduce your payments. However, both of these options will extend the repayment period of your loan.
  • Consider refinancing your loan: If your credit score has improved since you took out your loan, you may be able to refinance your loan at a lower interest rate. This could save you money on your monthly payments and make them more affordable.



You can use our online loan calculator to get an estimate of how long it will take to repay your loan. Just enter the loan amount, interest rate, and repayment terms, and the calculator will do the rest.

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