What this calculator does
This free UK loan repayment calculator estimates the monthly payment, total amount repaid and total interest charged on a standard amortising personal or secured loan. Enter the loan amount, the annual interest rate (or APR), and the loan term in years to get an instant result.
It is useful for comparing loan offers from different lenders, understanding the true cost of borrowing at different terms, or checking whether a loan fits within your monthly budget before applying.
How the calculation works
The calculator uses the same standard amortisation formula used for mortgages and most fixed-rate personal loans:
Where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12) and n is the total number of monthly payments. This produces fixed equal payments throughout the term.
Each payment covers the interest accrued since the previous payment plus a portion of the outstanding capital. In early months, most of each payment is interest. Towards the end of the term, most of each payment is capital repayment. This is why paying off a loan early saves disproportionately more interest than the remaining term might suggest.
APR vs interest rate: If the lender quotes an APR that includes fees, enter the APR for the most accurate estimate. If you enter a headline interest rate without fees, the total cost shown will be understated.
Example calculations
A £10,000 personal loan at 8% APR:
| Term | Monthly payment | Total repaid | Total interest |
|---|---|---|---|
| 1 year | £869 | £10,430 | £430 |
| 2 years | £452 | £10,843 | £843 |
| 3 years | £313 | £11,272 | £1,272 |
| 5 years | £203 | £12,166 | £2,166 |
The five-year term costs nearly five times more in interest than the one-year term (£2,166 vs £430), despite the monthly payment being less than a quarter of the size. This illustrates why shorter terms are significantly cheaper overall if the monthly payment is manageable.
When to use this calculator
- Comparing loan offers — enter each lender's APR and term to see the true monthly and total cost side by side before applying.
- Choosing your term — find the shortest term with a monthly payment that fits your budget to minimise total interest paid.
- Budgeting before borrowing — check the monthly repayment against your income and existing commitments before applying.
- Home improvement loans — estimate whether a personal loan or secured loan makes sense for a planned project, compared with remortgaging.
- Car finance — compare a personal loan against a PCP or hire purchase arrangement using the same monthly payment comparison.
Common mistakes
Comparing monthly payments without matching the term
A lower monthly payment is not necessarily cheaper. Lender A might offer a lower monthly payment by stretching the term — but charge more total interest. Always compare the total cost of credit, not just the monthly figure.
Entering the headline interest rate instead of the APR
The headline rate excludes fees. The APR includes them and is the legally required comparable figure. If a lender charges an arrangement fee of £150 on a £5,000 loan, the effective cost is higher than the interest rate alone suggests.
Assuming you will get the representative APR
The representative APR only needs to be available to 51% of accepted applicants. Lenders set individual rates based on credit profile. Many borrowers are offered a higher rate than advertised. Check eligibility before applying to avoid a hard credit search.
Not checking early repayment terms
Some lenders charge early settlement fees — typically 1–2 months' interest. If you might repay early, factor this into your cost comparison. A slightly higher rate with no early repayment fee can be cheaper overall if you plan to clear the loan ahead of schedule.
Frequently asked questions
What is the difference between APR and the interest rate?
The interest rate is the cost of borrowing as a percentage of the outstanding balance. APR includes the interest rate plus mandatory fees, expressed as a single annual figure. APR is the legally required comparable figure and gives a more accurate picture of total cost.
How does the loan term affect the total cost?
A longer term reduces the monthly payment but significantly increases total interest paid. A £10,000 loan at 8% over 5 years costs £2,166 in interest — over five times more than the same loan over 1 year (£430). Choose the shortest term your budget allows.
What factors affect the rate I am offered?
Lenders consider credit score, income, employment status, loan amount, term, existing debts and the purpose of the loan. The representative APR is available to 51% of applicants — many borrowers receive a personalised rate that is higher.
Can I repay a personal loan early?
Most lenders allow early repayment. Some charge an early settlement fee of up to 2 months' interest. Check your loan agreement before making a lump-sum overpayment. Clearing a loan early still saves significant interest even after a fee, particularly in the first half of the term.
What is the total cost of credit?
The total cost of credit is the total amount repaid minus the amount borrowed — i.e., the total interest charged over the term. Lenders must show this figure prominently in product information alongside the APR and monthly payment.
Should I use a personal loan or a credit card?
For larger amounts over longer periods, a personal loan typically has a lower rate than a credit card's standard purchase rate. However, 0% purchase or balance transfer credit cards can be cheaper for shorter-term borrowing if you can clear the balance before the promotional period ends.
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Important information
This calculator is for general information and planning purposes only. Results are estimates based on a standard amortisation formula applied to the inputs you provide. They do not constitute a loan offer, credit agreement or financial advice.
Actual loan repayments depend on your lender's specific terms, any fees included in the APR, and whether the rate is fixed or variable. This calculator assumes a fixed rate and no additional fees. Early repayment charges and any account fees are not included.
Always check the representative APR, total cost of credit and full terms and conditions before signing a credit agreement. Read our full Disclaimer.