Loan Calculator UK
Work out your monthly repayment and the total interest on a loan — and spot the two things lenders rely on you not noticing: representative APR and flat rates.
A loan calculator works out your monthly repayment and the total interest you’ll pay, from the amount you borrow, the APR, and the term. Borrow £10,000 at 8% APR over five years and you’ll pay about £203 a month — and £2,166 in interest on top of the £10,000. The number most people miss is that total interest, which the monthly figure quietly hides. Two traps make UK loans cost more than they appear. The first is representative APR: an advertised “6.9% representative” only has to be offered to 51% of accepted applicants, so the rate you get can be far higher — and on a £10,000 loan, ending up on 14.9% instead adds nearly £2,400 in interest. The second is the flat rate, sometimes quoted on car finance, which sounds low but charges interest on the full amount even as you pay it down — a “5% flat” rate is really closer to a 9.4% APR. This calculator shows your real monthly cost and total interest, and lets you compare rates and terms fairly. To compare with a mortgage, see the Mortgage Calculator; for overpaying, the Overpayment Calculator.
Loan details
Fees and charges
Overpayments
Affordability
Loan result
Estimated regular payment
Calculating…
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Total repayable
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Total interest
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Payoff time
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Interest saved
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Affordability ratio
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Rate comparison
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Loan repayments — quick lookup
The left table shows the monthly repayment and total interest on a £10,000 loan at common rates and terms. The right shows how the APR alone changes the cost of the same £15,000 loan over five years. The lesson sits in the interest columns: a low-looking monthly payment can hide a large total cost, especially over longer terms.
| Rate / term | Monthly | Interest |
|---|---|---|
| 6% · 3 yrs | £304 | £952 |
| 8% · 5 yrs | £203 | £2,166 |
| 10% · 5 yrs | £212 | £2,748 |
| 12% · 7 yrs | £177 | £4,828 |
| APR | Monthly | Interest |
|---|---|---|
| 3.9% | £276 | £1,534 |
| 6.9% | £296 | £2,779 |
| 9.9% | £318 | £4,078 |
| 14.9% | £356 | £6,364 |
Left: a £10,000 loan, showing how the lowest monthly payment (£177 at 12% over 7 years) actually carries the highest total interest (£4,828), because the longer term outweighs the spread. Right: the same £15,000 loan over five years, showing how the APR you’re offered drives the cost — the difference between 3.9% and 14.9% is over £4,800 in interest. Rates are illustrative; the rate you’re offered depends on your credit profile.
How a loan calculation works
A loan repayment looks like a single number, but it’s the output of a precise formula that splits every payment between interest and capital. Understanding it — and the two ways UK lenders dress up the cost — lets you see what a loan really costs before you sign.
The repayment formula
A standard personal loan is repaid in equal monthly instalments that fully clear the debt by the end of the term. Each payment covers the month’s interest first, with the rest reducing the balance — so early payments are mostly interest, and later ones mostly capital. The monthly figure is fixed from three inputs: the amount borrowed, the monthly interest rate, and the number of months.
Why the term cuts both ways
Stretching a loan over a longer term lowers the monthly payment but raises the total interest — and the trade is steeper than it looks. The same £10,000 at 8% costs £452 a month over two years but only £156 over seven; yet the total interest climbs from £855 to £3,092. A lower monthly payment feels easier, but you pay for it several times over. This is exactly the lever lenders use to make a big loan look affordable: extend the term, shrink the monthly, and quietly inflate the total cost.
APR is the figure that matters
The APR (Annual Percentage Rate) is the standardised cost of borrowing, including interest and most compulsory fees, so it’s the fair way to compare loans. The gap it makes is large: on a £15,000 loan over five years, moving from 3.9% to 14.9% APR adds over £4,800 in interest. Always compare on APR, not on the monthly payment or any “flat rate” — and be aware that the advertised APR isn’t necessarily the one you’ll be offered.
Worked examples
Four scenarios: a straightforward loan, the term trade-off, the representative APR trap, and the flat-rate deception.
Scenario 1 · A straightforward loan
£10,000 at 8% over five years
Monthly: £202.76
Total paid £12,166 · interest £2,166
A £10,000 loan at 8% APR over five years costs about £203 a month, and £2,166 in interest on top of the amount borrowed. That interest figure — almost 22% of the loan — is the number worth focusing on, because it’s what the loan actually costs you beyond what you spend. The monthly payment tells you whether you can afford it; the total interest tells you whether it’s good value. Always look at both before committing.
Scenario 2 · The term trade-off
Lower monthly, much higher cost
Over 2 years: £452/mo · interest £855
Over 7 years: £156/mo · interest £3,092
Spreading the same £10,000 over seven years instead of two drops the monthly payment from £452 to £156 — a relief for a tight budget. But the total interest more than triples, from £855 to £3,092, because you owe the balance for far longer. The lower monthly figure is genuinely useful if cash flow is the constraint, but it’s not “cheaper” — it’s more expensive overall. Choose the shortest term whose monthly payment you can comfortably afford.
Scenario 3 · The representative APR trap
“6.9% representative” that became 14.9%
Advertised 6.9%: £198/mo · interest £1,852
Rate you’re offered 14.9%: £237/mo · interest £4,242
A “representative APR” only has to be offered to 51% of accepted applicants — so the headline 6.9% is a rate just over half of approved borrowers get, and your offer can be much higher. If your credit profile lands you on 14.9% instead, the same £10,000 loan costs £39 more a month and £2,390 more in interest over five years. The advertised rate is a marketing figure, not a promise. Only the APR in your actual quote tells you what you’ll pay.
Scenario 4 · The flat-rate deception
“5% flat” is really about 9.4% APR
Interest charged: 5% × £10,000 × 5 = £2,500
Same cost as a true APR of roughly 9.4%
A flat rate — still seen on some car finance — charges interest on the full amount borrowed for the whole term, ignoring the fact that you’re steadily paying it down. So “5% flat” on £10,000 over five years charges £2,500 interest, the same as a true APR of around 9.4% — nearly double the headline. Flat rates always sound cheaper than they are. If a deal quotes a flat rate, convert it to APR (or ask the lender to) before comparing it with anything else.
Reading a loan deal — four things to check
Most loan calculators stop at the monthly payment. But the real cost — and the traps — sit in how the deal is presented. These four checks tell you what a loan genuinely costs:
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1
Is the advertised APR the rate you’ll actually get?
A “representative APR” is only guaranteed to 51% of accepted applicants. Your offer depends on your credit profile and can be much higher — turning a 6.9% headline into 14.9% in practice. Treat the advertised rate as marketing; only the APR in your personal quote is real.
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2
Is it an APR or a “flat rate”?
A flat rate charges interest on the full amount for the whole term, so it’s far more expensive than it sounds — “5% flat” is roughly a 9.4% APR. Flat rates appear on some car and point-of-sale finance. Always convert to APR before comparing; never judge a flat rate at face value.
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3
Are you choosing the term on monthly cost alone?
A longer term lowers the monthly payment but raises the total interest sharply — £10,000 at 8% costs £855 in interest over two years but £3,092 over seven. Pick the shortest term whose monthly payment you can comfortably afford, not the lowest monthly you can find.
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4
Can you overpay or settle early?
Under UK rules you can usually repay a regulated loan early, though the lender may charge up to about two months’ interest as compensation. Overpaying cuts the interest you pay overall. Check the early settlement terms before signing — flexibility to clear the loan sooner can save real money.
Same £10,000 loan — what the presentation hides
Total interest over 5 years:
The same £10,000 borrowed for the same five years can cost £1,852 or £4,242 in interest, depending entirely on the rate you’re actually offered and how the deal is framed. That’s why “what will this loan cost?” can’t be answered from the advertised rate or the monthly payment alone. For most borrowers the discipline is simple: get a personal quote and look at your APR, never a flat rate or a representative headline; choose the shortest affordable term; and check whether you can overpay or settle early. Do that, and the calculator’s total-interest figure tells you the real price of the loan. Enter your own amount, rate, and term to see exactly what you’d pay.
Soft searches and your credit score
Before applying, look for lenders offering an eligibility check or quote using a “soft” credit search, which shows your likely rate without leaving a mark on your credit file. A formal application leaves a “hard” search, and several in a short time can lower your score and make you look like a higher risk. Comparison sites and many lenders now let you see your personalised APR via a soft search first — so you can compare real offers before committing to any application that affects your file.
Two scenarios that change the picture
What if…
You’re offered a higher rate than advertised?
What if…
You borrowed £1,000 less by saving first?
Key loan terms explained
Loan deals are full of terms designed to look reassuring — APR, representative, flat rate. The ten below cut through them so you can read a credit agreement clearly.
- APR
- Annual Percentage Rate — the standardised cost of borrowing, including interest and most compulsory fees. The fair figure to compare loans by, and the one in your personal quote that actually matters.
- Representative APR
- The advertised rate a lender must offer to at least 51% of accepted applicants. Up to 49% can be offered a higher rate, so it’s a marketing figure, not the rate you’re guaranteed.
- Flat rate
- Interest charged on the full amount for the whole term, ignoring that you pay it down. It sounds low but is far higher than it appears — “5% flat” is roughly a 9.4% APR.
- Principal
- The amount you borrow, before interest. Each repayment reduces the principal a little, after covering that month’s interest, until it reaches zero at the end of the term.
- Term
- How long you take to repay. A longer term lowers the monthly payment but raises total interest, because you owe the balance for longer. The single biggest lever on total cost.
- Amortisation
- The process of repaying a loan in equal instalments that clear it by the end of the term. Early payments are mostly interest; later ones mostly capital.
- Soft search
- An eligibility check that shows your likely rate without leaving a mark on your credit file. Lets you compare personalised offers before any application that affects your score.
- Hard search
- A full credit check left by a formal application, visible on your file. Several in a short period can lower your score and make you look like a higher-risk borrower.
- Early settlement
- Repaying a loan ahead of schedule. UK rules let you settle a regulated loan early, though the lender may charge up to about two months’ interest as compensation.
- Secured vs unsecured
- An unsecured loan has no asset behind it; a secured loan is tied to property or a car, which the lender can take if you don’t repay. Secured loans often have lower rates but greater risk.
Five mistakes people make with loans
Loans are easy to misjudge because the cheapest-looking deal often isn’t. These five errors, drawn from the recurring r/UKPersonalFinance and r/CarTalkUK finance threads, are the costly ones.
Assuming you’ll get the advertised APR
A representative APR is only offered to 51% of accepted applicants, so your rate can be much higher. People budget on the headline and get a shock at the quote. On £10,000 over five years, 14.9% instead of 6.9% adds £2,390 in interest. Get a personal quote before assuming.
Cost: £2,390 more on a £10k loan Fix: check your actual APR via a soft searchFalling for a flat rate
A “5% flat rate” sounds cheaper than a 7% APR, but it’s actually far more expensive — around 9.4% APR — because interest is charged on the full amount throughout. Common on car finance. Always convert a flat rate to APR, or ask the lender to, before comparing.
Cost: nearly double the headline rate Fix: compare everything on APR, not flat rateChoosing the longest term for a low monthly
Stretching the term to shrink the monthly payment multiplies the total interest — £10,000 at 8% costs £855 over two years but £3,092 over seven. The low monthly feels affordable but you pay far more overall. Pick the shortest term you can comfortably manage.
Cost: thousands in extra interest Fix: shortest affordable term, not lowest monthlyApplying to lots of lenders at once
Each formal application leaves a hard search, and several in a short time can lower your credit score and make lenders wary. People scatter applications hoping one sticks, and damage their file. Use soft-search eligibility checkers to compare first, then apply once.
Cost: a dented credit score, worse rates Fix: soft-search to compare, then one applicationIgnoring the total cost of credit
Focusing only on whether the monthly payment fits the budget hides what the loan really costs. Two loans with similar monthlies can differ by thousands in total interest. The total amount repayable, shown on every UK credit agreement, is the figure that tells you the true price.
Cost: overpaying without realising Fix: compare the total amount repayableFrequently asked questions
How much will my loan repayments be?
Your monthly repayment depends on three things: the amount you borrow, the APR, and the term. For example, £10,000 at 8% APR over five years works out at about £203 a month, with £2,166 of interest on top.
The calculator works this out instantly from the standard amortisation formula. Just as important as the monthly figure is the total interest, which tells you what the loan actually costs beyond the amount you borrow.
What is APR on a loan?
APR stands for Annual Percentage Rate. It’s the standardised cost of borrowing, including the interest rate and most compulsory fees, expressed as a yearly percentage. It exists so you can compare loans fairly, whatever their fee structure.
Always compare loans on APR rather than the monthly payment or a “flat rate”. A lower monthly payment over a longer term can carry a higher APR and far more total interest, so the APR — and the total amount repayable — are the figures that reveal the true cost.
What does “representative APR” mean?
A representative APR is the advertised rate a lender must offer to at least 51% of accepted applicants. That means up to 49% can be offered a higher rate, based on their credit profile — so the headline rate isn’t guaranteed to you.
It’s effectively a marketing figure. If your credit profile lands you on 14.9% instead of an advertised 6.9%, a £10,000 loan over five years costs around £2,390 more in interest. Only the APR in your personal quote tells you what you’ll actually pay.
What’s the difference between APR and a flat rate?
An APR accounts for the fact that you steadily pay down the balance, charging interest only on what you still owe. A flat rate charges interest on the full original amount for the whole term, ignoring your repayments — so it’s much more expensive than it sounds.
A “5% flat rate” on £10,000 over five years charges £2,500 interest, the same as a true APR of about 9.4% — nearly double the headline. Flat rates still appear on some car and point-of-sale finance, so always convert to APR before comparing.
Does a longer loan term cost more?
Yes. A longer term lowers your monthly payment but increases the total interest, because you owe the balance for longer. The same £10,000 at 8% costs £855 in interest over two years but £3,092 over seven.
So a longer term isn’t “cheaper” — it spreads a larger total cost into smaller, more affordable chunks. The sensible approach is to choose the shortest term whose monthly payment you can comfortably afford, minimising the interest you pay overall.
Can I pay off a loan early?
Usually, yes. Under UK rules you can repay a regulated loan early, in full or in part. The lender may charge an early settlement fee of up to about two months’ interest as compensation, but repaying early still reduces the total interest you pay.
Overpaying when you can — even small amounts — cuts the balance and the interest charged on it. Check the early repayment terms in your agreement before signing, as the flexibility to clear a loan sooner can save a meaningful amount.
Will applying for a loan affect my credit score?
A formal application leaves a “hard” credit search on your file, and several in a short time can lower your score and make lenders cautious. But an eligibility check or quote using a “soft” search doesn’t affect your file.
The smart approach is to use soft-search eligibility checkers — offered by comparison sites and many lenders — to see your personalised rate first, then submit a single formal application to the lender most likely to accept you at the best rate.
How do I get the best loan rate?
The rate you’re offered depends largely on your credit profile, so checking and improving your credit file before applying helps. Borrowing a sensible amount over a shorter term, and comparing offers on APR via soft searches, all improve your position.
It’s also worth considering whether you need to borrow the full amount — saving a little first reduces both the principal and the interest. This is general information rather than advice; for your situation, an impartial source like MoneyHelper can help.
Related calculators
A loan sits alongside the other ways of borrowing and the income that supports it. These calculators handle each piece.
Methodology & sources
How the maths works
The calculator uses the standard loan amortisation formula, M = P × i × (1 + i)^n ÷ ((1 + i)^n − 1), where P is the amount borrowed, i is the monthly interest rate (the APR divided by 12), and n is the number of months. This gives the fixed monthly repayment that fully clears the loan by the end of the term. Total interest is the monthly payment multiplied by the number of months, minus the amount borrowed. Each repayment is split between interest on the outstanding balance and a reduction of the capital, so early payments are mostly interest and later ones mostly capital. The APR is treated as the headline annual rate for the calculation; in practice a lender’s APR may include certain fees, and a flat rate quoted on some finance deals charges interest on the full balance throughout, making it roughly equivalent to a much higher APR.
These are illustrative estimates to show how a loan behaves, not a quote or an offer. The actual rate you’re offered depends on your credit profile and the lender, and may differ significantly from any advertised representative APR. Real agreements may also include fees, insurance, or charges not modelled here, and the total amount repayable shown in your credit agreement is the definitive figure. The aim is to help you understand a loan’s monthly cost and total interest, and compare deals fairly on APR — not to recommend any lender or product, or to predict the rate you’ll be offered.
Assumptions and conventions used
- Formula: M = P × i × (1+i)^n ÷ ((1+i)^n − 1)
- i = monthly rate (APR ÷ 12) · n = months
- Total interest = (monthly × months) − amount borrowed
- Equal monthly instalments over the full term
- Representative APR offered to at least 51% of accepted applicants
- Flat rate charges interest on the full amount throughout
- Early settlement may incur up to ~2 months’ interest
- Soft search doesn’t affect your credit file; a hard search does
- Rates shown are illustrative, not quotes