How loan repayments work
Most UK personal loans are amortising: you repay a fixed amount every month for a fixed term, and each payment covers interest plus part of the original amount borrowed. By the last payment the balance reaches zero. This calculator uses the same formula lenders use, so you can see the monthly repayment and the total amount you will pay back for any combination of loan amount, interest rate and term.
APR vs interest rate
The Annual Percentage Rate (APR) is the standard way UK lenders show the cost of credit. It includes interest and most compulsory fees, expressed as a yearly rate, which makes it the best figure for comparing loans. Lenders advertise a representative APR, which at least 51% of successful applicants must receive. You may be offered a different rate after a full application depending on your credit record, so always check your personal rate before signing.
For a straightforward fixed-rate loan without fees, using the APR in this calculator gives a close estimate of the monthly repayment.
What affects the cost of a loan
- Amount – rates often vary by loan size. Many lenders offer their lowest rates for mid-sized loans, for example between a few thousand and around £20,000.
- Term – a longer term reduces your monthly repayment but increases the total interest. A shorter term costs more each month but less overall.
- Credit history – your credit file influences both whether you are accepted and the rate you receive.
- Fees and early repayment charges – UK consumer credit rules let you repay early, but lenders can charge a limited amount of interest as a fee.
Worked example
Borrowing £10,000 at 7% APR over 5 years (60 months) gives a monthly repayment of about £198. Over the term you would repay around £11,881, meaning roughly £1,881 in interest. Stretching the same loan to 7 years lowers the payment to about £151 but increases total interest to roughly £2,677. The calculator shows these trade-offs instantly.
Before you borrow
- Check eligibility without harming your credit score. Many lenders and comparison sites offer “soft search” eligibility checks.
- Compare the total amount repayable, not just the monthly payment.
- Consider alternatives. For smaller amounts, a 0% purchase credit card repaid within the promotional period can be cheaper – but only if you are disciplined about clearing it. For larger purchases such as cars, compare dealer finance (PCP or hire purchase) with a personal loan on total cost.
- Make sure the repayment fits your budget with room to spare for unexpected costs. Our budgeting guide can help.
Secured vs unsecured loans
A standard personal loan is unsecured – it is not tied to your home. Secured loans (sometimes called homeowner loans or second charge mortgages) can allow larger amounts or longer terms but put your home at risk if you cannot keep up repayments. Think carefully before securing other debts against your home.
If you are struggling with debt
If repayments are becoming difficult, talk to your lender early – they are required to treat customers in financial difficulty fairly. Free, confidential debt advice is available from the government-backed MoneyHelper service and from charities such as StepChange and Citizens Advice. Avoid paying for debt help that is available free.
Figures are illustrative. Your actual rate and repayments are set by the lender after a full credit assessment.