Logo

UK Loan Calculator

Easily estimate your monthly repayments and total interest costs.

£
£

Pay more each month to reduce interest and finish early.

Monthly Repayment

£193.33

Total Repayment

£11,599.80

Total Interest

£1,599.80

account_balance

How Do Loan Repayments Work?

When you take out a loan, your monthly repayment is typically split into two parts: the principal (the actual amount you borrowed) and the interest (the cost of borrowing the money from the lender).

  • 1

    Amortization

    Over time, the portion of your payment going towards interest decreases while the portion going towards the principal increases.

  • 2

    Overpayments

    By paying even a small amount extra each month, you can significantly reduce the total interest paid and shorten the loan term.

Key Terms to Know

APR (Annual Percentage Rate)

This represents the true cost of borrowing, including the interest rate and any mandatory fees associated with the loan.

Fixed vs. Variable Rate

Fixed rates stay the same throughout the term, while variable rates can fluctuate based on the Bank of England's base rate.

How this calculator works

The calculator estimates loan repayments using the loan amount, term and interest rate. It then compares the standard repayment path with any extra monthly overpayment you choose, so you can see how much interest and time might be saved.

Assumptions used

  • The calculation assumes a standard amortising loan with regular monthly repayments.
  • It does not include every lender fee, penalty, payment holiday rule or credit-based pricing adjustment.
  • Overpayment benefits are illustrative and depend on the lender allowing those extra payments without extra charges.
  • The result is intended for budgeting and comparison, not as a formal borrowing quote.

Frequently asked questions

Why does a longer term lower monthly cost?

Because the balance is repaid over more months, which reduces each monthly instalment. The trade-off is that total interest usually increases.

Are overpayments always a good idea?

They can reduce interest and shorten the term, but you should also keep enough cash for emergencies and check whether the lender charges early repayment fees.

Does APR match the rate used here?

Not exactly. APR can include fees and mandatory charges, while a simplified calculator often focuses on the stated interest rate for the repayment estimate.

Should I use this before applying?

Yes for planning, but always compare the result with the lender's actual quote and full credit agreement before borrowing.