Loan Repayment Calculator
Enter the loan amount, annual interest rate (APR) and term to see your monthly repayment, the total you will pay back and the total interest cost. It works for any amortising loan — personal loans, car finance, or anything else repaid in equal monthly instalments.
How it works
The standard amortising loan formula is used: Payment = Amount × r × (1+r)^n ÷ ((1+r)^n − 1), where r is the monthly rate (APR ÷ 12) and n the number of months. Early payments are mostly interest; later ones mostly capital.
A worked example: enter £10,000 over 5 years at 9% APR and the result is about £207 a month. In month one, interest is £10,000 × 0.75% = £75, so only about £132 of that first payment reduces the balance; by the final months almost the whole payment is capital. That front-loading is why settling a loan halfway through saves less interest than half the total.
The same example shows why "rate × amount × years" is the wrong mental shortcut: 9% of £10,000 for 5 years suggests £4,500 of interest, but the true figure is about £2,455 — because the balance falls every month, you are not paying interest on the full £10,000 for the full term. This calculator uses the exact declining-balance arithmetic, not the shortcut.
Term length trades monthly comfort against total cost. £10,000 at 9% costs about £318 a month over 3 years (roughly £1,450 of interest) versus about £207 a month over 5 years (roughly £2,455 of interest) — the longer term cuts the payment by a third but adds around £1,000 to the interest bill.
APR (Annual Percentage Rate) includes mandatory fees, which is why it is the only fair way to compare loans. A lower headline rate with a high arrangement fee can cost more than a higher APR with none.
Representative APR only has to be offered to 51% of accepted applicants — your personal rate may differ. Overpaying where allowed shortens the term and can cut total interest substantially; UK lenders must allow early settlement, with at most around 1-2 months' interest as compensation.
What the result assumes: a fixed rate and equal monthly payments for the whole term. It does not model variable rates, payment holidays, fees paid separately up front, or revolving credit such as cards and overdrafts, which work on a completely different basis. Treat the output as the contractual baseline — overpayments only ever improve on it.
FAQ
How is a monthly loan repayment calculated?
With the amortising formula: the amount borrowed is spread over the term with compound interest at the monthly rate. For £10,000 over 5 years at 9% APR the monthly payment is about £207, total repayment about £12,455 — meaning roughly £2,455 of interest. This tool computes it exactly.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing alone; APR also folds in compulsory fees, expressed as a yearly rate. UK lenders must quote APR, and it is the figure to compare — a 6.9% rate with a £500 fee can be a worse deal than a clean 8.9% APR depending on size and term.
Can I pay my loan off early?
Yes — under the Consumer Credit Act you can settle early at any time, and the lender can charge at most about one to two months' interest as compensation. Partial overpayments reduce the balance and total interest; check whether your lender recalculates the payment or shortens the term.
Why is so much of my early payments interest?
Because interest is charged on the outstanding balance, which is at its largest at the start. On £10,000 at 9% APR, the first month generates £75 of interest (£10,000 × 0.75%), so of a £207 payment only about £132 clears capital. As the balance falls, the interest share of each identical payment shrinks and the capital share grows — the defining feature of an amortising loan.
Does a longer term make a loan cheaper?
It makes the monthly payment smaller but the loan more expensive overall. £10,000 at 9% costs about £318 a month over 3 years but only £207 over 5 — yet total interest rises from roughly £1,450 to £2,455. If you need the lower payment, take the longer term but overpay when you can: that recaptures much of the difference without committing you to the higher payment.
What does the total interest figure include?
It is the difference between everything you repay and the amount you borrowed, assuming the rate you entered applies for the whole term and every payment is made on schedule. If you entered the APR, mandatory fees are already reflected in that rate; separately charged fees, late-payment charges or rate changes on a variable deal are not included.
Would a smaller example help me sanity-check the tool?
Try £5,000 over 3 years at 12% APR: the monthly rate is 1%, and the formula gives about £166 a month — roughly £5,980 repaid in total, so close to £980 of interest. If you work the same figures through the formula by hand (5,000 × 0.01 × 1.01³⁶ ÷ (1.01³⁶ − 1)), you should land on the same answer the calculator shows.