Enter your loan amount, interest rate, and term to see your monthly repayment.
Monthly repayments on a standard repayment loan are calculated using the annuity formula, which produces equal monthly payments that cover both interest and capital over the loan term. Early payments are mostly interest; later payments are mostly capital.
Monthly payment = P × (r(1+r)^n) ÷ ((1+r)^n − 1), where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. This formula assumes a fixed interest rate throughout the term. Variable rate loans will have repayments that change when the rate changes.
Extending the loan term reduces monthly payments but substantially increases the total interest paid. A £10,000 loan at 6% over 3 years costs roughly £912 in interest. The same loan over 7 years costs roughly £2,180 — more than double. The monthly payment drops from £304 to £145, but you pay for more than twice as long. Before choosing a longer term for affordability, calculate the total cost difference.
The interest rate tells you what you pay on the outstanding balance. The Annual Percentage Rate (APR) includes the interest rate plus any mandatory fees — arrangement fees, broker fees, account fees — expressed as a single annual figure. APR is the correct figure to compare between lenders. This calculator uses the nominal interest rate; if your lender charges fees, the true cost will be higher than shown.
Making overpayments reduces the outstanding principal faster, which reduces the interest charged in subsequent months. Even small regular overpayments can shorten the loan term significantly and reduce total interest. Most personal loans allow overpayments without penalty, but check your agreement — some charge early repayment fees, particularly in the first year.
An interest-only loan charges interest on the full principal each month, with the capital repaid as a lump sum at the end of the term. Monthly payments are lower — for a £10,000 loan at 6% over 5 years, interest-only payments are £50/month versus £193/month on a repayment basis — but the capital is never reduced and the lump sum must be found at maturity. Interest-only is common in mortgage products; most personal loans are repayment.
When comparing loans, look at the total amount repayable (monthly payment × number of payments + any fees), not just the monthly payment or the headline rate. A slightly higher monthly payment on a shorter term often costs less overall than a lower monthly payment stretched over more years.