Bureau of Wealth

Loan Repayment Calculator

By the Bureau of Wealth team Updated

This calculator is general information, not financial advice. Check your own figures with the provider or a qualified adviser before acting on them.

Enter the amount, APR and term to see your monthly repayment, the total interest you will pay, and how much sooner overpayments clear the loan.

The representative APR from your loan offer.

Check your lender allows overpayments without a fee.

Check the highlighted fields to see your results.

What this calculator assumes

  • The interest rate is fixed for the whole loan and interest is charged monthly on the balance still owed.
  • The APR you enter is divided by 12 to get the monthly rate. UK lenders calculate APR in a slightly different way and include some fees, so a quote can differ from this estimate by a few pounds a month.
  • Repayments are made on time at the end of each month, with no payment holidays.
  • Fees charged separately, such as arrangement or late payment fees that are not part of the APR, are not included.
  • Overpayments go straight to reducing the balance and the lender charges no fee for them.

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How the monthly repayment is worked out

A fixed-rate loan is repaid in equal monthly instalments. Each repayment covers the interest that built up on the balance that month, and whatever is left over reduces the balance. Early on, most of each repayment is interest. As the balance falls, the interest portion shrinks and more of each repayment goes towards the amount you borrowed.

The calculator uses the standard repayment formula that banks and spreadsheets use. It takes the monthly rate (the APR divided by 12), the number of monthly repayments (the term in years multiplied by 12) and the amount borrowed, and finds the single repayment that brings the balance to exactly zero in the final month. It then works through the loan month by month to add up the interest and build the year-by-year table and chart.

A worked example

Borrowing £15,000 at 7.9% APR over five years gives 60 monthly repayments of £303.43. Across those five years you repay £18,205.71, so the loan costs £3,205.71 in interest. Over three years instead, the repayment rises to £469.35 a month but the total interest falls to £1,896.74, because you are borrowing the money for less time.

You can check the repayment in any spreadsheet with the formula =PMT(7.9%/12, 60, -15000), which returns 303.43.

What overpayments do

Any amount you pay above the required instalment goes straight to the balance. A smaller balance means less interest the next month, so the saving builds over time. On the same £15,000 loan, overpaying £50 a month clears it 10 months early and saves £556.23 in interest.

Under the Consumer Credit Act you have the right to repay a personal loan early, in full or in part. Your lender may be allowed to charge a small early settlement fee, so check your agreement first.

Comparing loan offers

Loan adverts must show a representative APR, which at least 51% of successful applicants are expected to receive. The rate you are actually offered depends on your credit history and can be higher. MoneyHelper recommends comparing loans by APR, because it includes the interest and any arrangement fees. Run each offer through the calculator with its APR and the same term to compare the monthly cost and total cost side by side.

If the loan is for something you could wait for, the savings goal calculator shows how much you would need to put aside each month to pay cash instead, and what interest you would earn rather than pay.

Frequently asked questions

What does representative APR mean?

It is the rate a lender expects at least 51% of successful applicants to get. You might be offered a higher rate depending on your credit history, so use the rate in your personal quote when you run the calculator.

Why is so much of my early repayment interest?

Interest is charged on the balance you still owe. At the start that balance is at its highest, so the interest portion of each repayment is largest. It falls every month as the balance goes down.

Is a longer loan cheaper?

A longer term lowers the monthly repayment but usually raises the total cost, because interest is charged for more months. Compare the same loan over three and five years in the calculator to see the difference.

Can I pay my loan off early?

Yes. You have a legal right to repay a regulated personal loan early, in full or in part. The lender may charge an early settlement fee, which is capped by law, so check your agreement for the exact amount.

Can I use this for car finance?

It works for a fixed-rate personal loan used to buy a car and for hire purchase with equal monthly payments. It does not model PCP deals, which end with a large optional final payment.

Sources

Figures come from institutions millions of people rely on. How we keep calculators accurate.