Loan Calculator
Calculate monthly loan repayments, total interest, and total cost for personal loans, car finance, and more.
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What Is a Loan Calculator?
A loan calculator works out your monthly repayments and total borrowing cost before you apply. Enter the amount, interest rate, and term to see an exact payment breakdown. Compare different loan amounts and terms to find the most affordable option.
Personal loans in the UK range from £1,000 to £50,000 with terms of 1 to 7 years. Interest rates vary from 2.8% for the best-rated borrowers to 30%+ for poor credit. This calculator uses the same amortisation formula that lenders apply.
Test different scenarios by changing the term length. A shorter term increases monthly payments but reduces total interest. A longer term makes payments more manageable but costs more overall.
How Do You Use This Loan Calculator?
Enter the loan amount you need, the annual interest rate, and the repayment term. Click Calculate to see your monthly payment, total interest, and total repayment amount.
- Enter the total amount you want to borrow in pounds.
- Input the annual interest rate (APR) from the lender's quote.
- Set the repayment term in years or months.
- Click Calculate to see your monthly payment amount.
- Review the total interest and total repayment figures.
- Adjust the term or amount to find a payment that fits your budget.
How Does the Loan Calculator Formula Work?
The formula used: M = P[r(1+r)^n] / [(1+r)^n - 1] where P = loan amount, r = monthly rate, n = total payments
The loan repayment formula distributes the total cost of borrowing into equal monthly instalments over the full term.
M = P[r(1+r)^n] / [(1+r)^n - 1]
M is the monthly payment. P is the amount borrowed. r is the monthly interest rate (annual APR divided by 12). n is the total number of payments. Each instalment pays off that month's interest charge plus a portion of the outstanding principal. Early payments are mostly interest; later payments are mostly principal.
What Are Some Example Calculations?
A £15,000 personal loan at 7.9% APR over 5 years: Monthly payment = £302.76. Total interest = £3,165.60. Total repayment = £18,165.60.
£5,000 personal loan at 5.9% APR over 3 years
r = 0.059/12 = 0.004917. n = 36. M = 5000 × 0.004917 × 1.004917^36 / (1.004917^36 - 1)
Monthly payment = £151.95. Total interest = £470.20. Total repayment = £5,470.20.
£20,000 car finance at 8.9% APR over 4 years
r = 0.089/12 = 0.007417. n = 48. M = 20000 × 0.007417 × 1.007417^48 / (1.007417^48 - 1)
Monthly payment = £496.37. Total interest = £3,825.76. Total repayment = £23,825.76.
£2,000 short-term loan at 15% APR over 12 months
r = 0.15/12 = 0.0125. n = 12. M = 2000 × 0.0125 × 1.0125^12 / (1.0125^12 - 1)
Monthly payment = £180.52. Total interest = £166.24. Total repayment = £2,166.24.
When Should You Use a Loan Calculator?
Use this calculator before applying for any personal loan, car finance, or home improvement loan. Enter the quoted APR from at least three lenders to compare total costs. Check that the monthly payment fits within your budget after accounting for rent, bills, and living expenses.
Run the numbers before deciding between a loan and other credit options. Compare the total cost of a £5,000 personal loan at 5.9% against putting the same amount on a 0% purchase credit card. Factor in the promotional period and revert rate.
What Do These Terms Mean?
How Do the Options Compare?
| Feature | Personal Loan | Credit Card | Overdraft |
|---|---|---|---|
| Typical APR | 2.8%-29.9% | 0% intro / 19.9%-39.9% | 35%-40% EAR |
| Borrowing range | £1,000-£50,000 | £500-£15,000 credit limit | £250-£5,000 |
| Repayment structure | Fixed monthly payments | Minimum payment or full balance | No fixed schedule |
| Interest calculation | Fixed rate for the full term | Charged on remaining balance monthly | Daily interest on overdrawn amount |
| Best for | Large planned purchases over £3,000 | Short-term spending under £3,000 with 0% deal | Temporary shortfalls under £500 |
| Credit score impact | Single hard search at application | Single hard search at application | No additional search if already arranged |
What Are the Best Tips to Know?
- Borrow between £7,500 and £15,000 to access the lowest advertised personal loan rates in the UK.
- Use an eligibility checker before applying to avoid hard credit searches that lower your score.
- Pay more than the minimum each month if your lender allows penalty-free overpayments.
- Avoid payment protection insurance (PPI) unless you have no other income protection in place.
- Check the total repayment amount, not just the monthly figure, when comparing loan offers.
What Mistakes Should You Avoid?
- Comparing headline rates without checking the representative APR — only 51% of applicants receive the advertised rate.
- Choosing the longest term to reduce monthly payments without realising total interest doubles or triples.
- Forgetting to account for arrangement fees or early repayment charges in the total cost.
- Taking multiple loan applications in a short period, which creates several hard credit searches.
Frequently Asked Questions
What is APR?
APR (Annual Percentage Rate) is the total cost of borrowing expressed as a yearly rate. It includes the interest rate plus any mandatory fees, giving you a clearer picture of the true cost of a loan.
How can I reduce my loan payments?
You can reduce payments by choosing a longer repayment term, finding a lower interest rate, or borrowing less. A longer term lowers monthly payments but increases total interest paid.
Does paying off a loan early save money?
Yes, early repayment reduces the total interest you pay. Check for early repayment charges first — some lenders charge a fee, typically one or two months of interest.
What credit score do I need for a personal loan?
Each lender sets its own criteria. The best rates (under 5% APR) typically require an Experian score above 800 or an Equifax score above 420. Scores below these thresholds still qualify but at higher rates.
Is a secured or unsecured loan better?
Secured loans offer lower rates because your property acts as collateral. Unsecured loans carry higher rates but no risk to your home. Choose unsecured for amounts under £15,000 and secured only when the rate saving justifies the risk.
How much can I borrow with a personal loan?
UK personal loans range from £1,000 to £50,000. Lenders assess affordability based on income, existing debts, and credit history. The lowest rates apply to loans between £7,500 and £15,000.
What is the difference between flat rate and APR?
A flat rate calculates interest on the original loan amount for the entire term. APR accounts for the reducing balance. A 5% flat rate on a £10,000 loan costs more than 5% APR because interest is charged on the full £10,000 each year.
Can I get a loan with bad credit?
Yes, but expect higher rates between 20%-50% APR. Consider a credit union loan (capped at 42.6% APR by law) or a guarantor loan. Avoid payday lenders with rates exceeding 1,000% APR.
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