How the monthly payment is calculated
payment = P × i / (1 − (1 + i)^(−n)) i = r × (1 + BSMV + KKDF) (Turkish consumer and car loans)
This is the standard equal-installment (annuity) formula used for most mortgages and consumer loans. P is the amount borrowed, n the number of monthly payments and i the monthly rate. If you enter an annual rate, the monthly rate is a twelfth of it, which is how a nominal annual rate (APR) is converted.
Every payment is the same, but its make-up changes: interest is charged on the balance still owed, so early payments are mostly interest and later ones mostly principal. Each month, interest = remaining balance × monthly rate, and the rest of the payment reduces the balance.
In Türkiye, banks also collect BSMV (banking and insurance transactions tax) and KKDF (resource utilisation support fund levy) on the interest portion of every installment of a personal or car loan. That raises the effective monthly rate to r × (1 + BSMV + KKDF): with both at 15%, a 3% monthly rate costs 3.9% a month. Housing loans are exempt from both.
Worked example
Take a $300,000 mortgage at 6.5% a year over 360 months (30 years). The monthly rate is 6.5% ÷ 12 ≈ 0.542%, and the formula gives a payment of $1,896.20.
Over the whole term you repay $682,633.47: $382,633.47 of interest. The interest alone is more than the amount borrowed. In the first month $1,625.00 of the payment is interest and $271.20 reduces the balance.
How to read the results
The monthly payment is what you pay every month for the whole term. Total repayment is all the payments added together; total interest is what borrowing costs on top of the amount you receive. When Turkish taxes apply, they are shown separately.
The effective monthly rate includes those taxes, and its yearly figure compounds it over twelve months, so you can compare an offer quoted per month with one quoted per year. The official annual cost that lenders publish (APR, or “yıllık maliyet oranı” in Türkiye) also includes fees, so it will be higher.
In the schedule, watch the interest column shrink and the principal column grow. Paying extra early — or choosing a shorter term — cuts total interest the most, because it removes balance that would otherwise accrue interest for years.
Assumptions and limits
- The rate is fixed for the whole term; with a variable rate the payment changes as rates move.
- Payments are monthly and equal (an annuity loan). Balloon payments, interest-only periods and equal-principal plans are not covered.
- Arrangement fees, insurance, appraisal costs and other charges are not included.
- BSMV and KKDF use the rates you enter. The defaults are the current statutory rates for consumer loans, but they can change, so confirm them with your bank.
- This is an estimate, not a loan offer; your bank's schedule may differ by a few cents because of rounding.
Frequently asked questions
How is a monthly loan payment calculated?
With the annuity formula payment = P × i / (1 − (1 + i)^(−n)), where P is the loan amount, i the monthly rate and n the number of months. For example, 100,000 at 1% a month over 12 months gives a payment of 8,884.88.
How do I convert an annual interest rate to a monthly one?
For a nominal annual rate (APR), divide by 12: 6% a year is 0.5% a month. The calculator does this when you choose “Per year”. Compounded over twelve months, 0.5% a month works out to an effective 6.17% a year.
What are BSMV and KKDF?
They are charges Turkish banks collect on the interest of consumer loans. BSMV (Banka ve Sigorta Muameleleri Vergisi) is the banking and insurance transactions tax; KKDF (Kaynak Kullanımını Destekleme Fonu) is a levy paid into the resource utilisation support fund. Both are currently 15% of the interest on personal and car loans, while housing loans are exempt. Check the current rates with your bank, as they can change.
Why is most of my early payment interest?
Interest is charged on the balance you still owe, which is largest at the start. As each payment reduces the balance, the interest part shrinks and more of the same payment goes to principal.
Does a shorter term save money?
Yes. A shorter term means a higher monthly payment but much less interest, because the balance is paid down faster. A 300,000 mortgage at 6.5% costs about 382,633 in interest over 30 years but about 170,398 over 15 years.