What this UK loan calculator shows
Enter the amount you want to borrow, the annual rate and the repayment term. The calculator estimates the fixed monthly payment, total interest, total amount repaid and the first 12 months of the repayment schedule. If you plan to pay more than the contractual amount, add a monthly overpayment to see the estimated time saved.
The result is designed for a conventional fixed-rate personal loan. It can also illustrate other loans with equal monthly instalments, but it is not suitable for credit cards, overdrafts, hire purchase with a balloon payment, or loans whose rate changes during the term.
The loan repayment formula
The contractual monthly payment is calculated as:
M = P × r(1+r)n ÷ ((1+r)n − 1)
- M is the monthly payment.
- P is the amount borrowed.
- r is the annual rate divided by 12 and expressed as a decimal.
- n is the number of monthly payments.
At 0% interest, the formula simplifies to the amount borrowed divided by the number of months. For every other rate, the interest portion is highest at the start because the outstanding balance is largest. The principal portion grows as the balance falls.
Worked example — £10,000 over five years at 7.5%
A £10,000 fixed-rate loan over 60 months at 7.5% produces a monthly payment of about £200. The exact result depends on the lender's interest method and rounding. The useful comparison is not only whether that payment fits your budget, but how much interest is added across all 60 payments.
APR, representative APR and your actual rate
UK lenders often advertise a representative APR. It helps compare the annual cost of credit, including certain compulsory charges, but not every accepted applicant receives that advertised rate. Your credit history, income, loan amount and term can affect the rate offered to you. For a decision about a specific loan, replace the example rate with the rate and fees in your personalised illustration.
This calculator treats the entered percentage as a nominal annual interest rate and divides it by 12. It does not calculate regulated APR from the timing of every advance, repayment and compulsory charge. If APR is the only percentage available, entering it is an approximation rather than a reconstruction of the lender's quotation.
MoneyHelper recommends comparing the APR, total amount repayable, monthly cost, late-payment charges and any early-repayment cost. A lower monthly payment is not automatically a cheaper loan: extending the term normally reduces the monthly amount but increases total interest.
How overpayments change the cost
An extra payment reduces the principal earlier. The next month's interest is then charged on a smaller balance, so the benefit compounds. The calculator keeps the contractual payment unchanged and adds your chosen overpayment until the final, smaller payment clears the balance.
The mathematical saving is not necessarily the amount a lender will quote as an early-settlement figure. Your agreement may specify notice, a settlement calculation or an early-repayment charge. Ask the lender for a settlement statement before making a large overpayment.
Affordability and safer borrowing
Test the payment against a realistic monthly budget, including housing, energy, food and existing credit. Consider whether the payment would still be manageable after a fall in income or an increase in essential bills. If borrowing is needed to cover ongoing essentials or existing repayments, free debt advice may be more useful than another loan.
Sources and validation
The formula and benchmark results were checked against theBank of England borrowing calculator. Guidance on comparing borrowing options comes fromMoneyHelper. Calculations run locally in your browser; no loan details are submitted to us.