Loan Calculator

An amortising loan is repaid in equal monthly installments, each split between interest (on the outstanding balance) and principal (which reduces the balance). Early payments are mostly interest; later payments are mostly principal.

Monthly payment formula

Given a principal P, monthly rate r and number of months n:

M = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)

Worked example

100,000 SAR loan at 5% annual interest for 10 years:

1. Monthly rate r = 5% ÷ 12 = 0.004167
2. Number of months n = 10 × 12 = 120
3. Monthly payment M ≈ 1,060.66 SAR
4. Total payment over 10 years ≈ 127,279 SAR
5. Total interest paid ≈ 27,279 SAR

Saudi Islamic banking alternatives

Saudi banks offer Sharia-compliant alternatives to interest-based lending. The monthly installments look similar, but the underlying contract differs:

• Murabaha (cost-plus sale): the bank buys an asset and resells it to the customer at a known higher price, paid in fixed installments. The 'profit margin' is disclosed upfront and never changes.
• Tawarruq: a deferred-payment sale where the bank sells a commodity to the customer on credit, who immediately sells it to a third party for cash. Common for personal financing.

This calculator uses the conventional interest formula for illustration. Actual bank offers list a fixed installment amount; ask your bank for the exact schedule.

Practical tips

• Halve your loan term to roughly halve the interest paid — at the cost of a higher monthly payment.
• A smaller principal (bigger down payment) saves more interest than a slightly lower rate over short terms.
• Total interest depends on rate AND duration — don't optimise only one.
• Use the schedule to identify when you'd cross 50% of principal paid off; that's typically much later than 50% of the term.