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How this works

A personal loan is repaid in equal monthly instalments. Each payment covers that month’s interest and pays off some of the loan, so the interest part shrinks over time and the repayment part grows.

The calculator turns the APR into a monthly rate, finds the fixed payment that clears the loan exactly by the end of the term, and adds up how much interest you pay along the way. In the UK an APR is a true yearly rate, so a 6.9% APR works out at about 0.56% a month, not 6.9% ÷ 12.

What it assumes

  • Any arrangement fees are already included in the APR.
  • The rate is fixed and payments are made at the end of each month.
  • You keep to the schedule, with no missed or early payments.

Worked example

Borrowing £10,000 at 6.9% APR

  1. Over 36 months the payment is £307.36 a month. You pay £1,064.96 in interest, £11,064.96 in total.
  2. Stretch it to 60 months and the payment drops to £196.56, but the interest rises to £1,793.43.
  3. So the longer term costs £728.47 more in return for about £111 a month of breathing room.

Worked out with the same maths as the calculator above.

What to do next

Common questions

Why might my monthly payment differ from my lender’s quote?

The advertised APR is a representative rate, and you may be offered a higher one after a credit check. Some lenders also charge fees or set the first payment date differently. Use the rate in your actual offer.

Is a shorter loan always better?

It always costs less in interest, but only choose it if the higher payment fits your budget comfortably. Missing payments costs more than the interest you’d save.

Can I pay a personal loan off early?

Usually, yes. Ask your lender for a settlement figure first, as some charge a small fee for repaying early. Clearing the loan sooner still usually saves interest.

What’s the difference between APR and interest rate?

The APR includes the interest plus any compulsory fees, shown as a yearly rate. It’s the best figure for comparing loans. The calculator treats the APR as the full cost of borrowing.

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