Personal Loan Calculator

A personal loan calculator works out your monthly repayment, total interest, and total cost for an unsecured personal loan based on the amount, rate, and term. It is used by anyone comparing loan offers, planning a large purchase, or deciding how much to borrow and over what period.

How to Use the Personal Loan Calculator

1. Enter the loan amount you want to borrow.
2. Enter the annual interest rate from the lender's quote or the representative APR.
3. Set the loan term in months or years.
4. Click calculate to see the monthly repayment, total interest paid, and total amount repaid.
5. Adjust the term to see how shorter or longer periods affect the monthly cost and total interest.

The Formula

Personal loan repayments use the standard amortisation formula:

M = P x (r(1 + r)^n) / ((1 + r)^n - 1)

Where M is the monthly payment, P is the principal (amount borrowed), r is the monthly interest rate (annual APR divided by 12, then divided by 100), and n is the number of monthly payments.

Total repaid = M x n Total interest = Total repaid - P

Real-World Example

You want to borrow £7,500 over 3 years (36 months) at a representative APR of 7.4%.

• Monthly rate: 7.4% / 12 / 100 = 0.006167
• Monthly payment: 7,500 x (0.006167 x (1.006167)^36) / ((1.006167)^36 - 1) = approximately £232
• Total repaid: £232 x 36 = £8,352
• Total interest: £8,352 - £7,500 = £852

If you extend the term to 5 years (60 months):

• Monthly payment: approximately £149
• Total repaid: £149 x 60 = £8,940
• Total interest: £1,440

The longer term reduces monthly outgoings by £83 but costs an extra £588 in interest.

Comparing Personal Loan Offers

The representative APR shown in adverts is not necessarily the rate you will be offered. Lenders only need to offer the representative APR to 51% of accepted applicants. Your personal rate depends on your credit history, income, and existing commitments. When comparing loans, use the total amount repayable rather than just the monthly payment, as different terms and fee structures make monthly comparisons misleading. Some lenders charge an arrangement fee added to the loan balance (so you pay interest on it), while others include fees in the APR. A lower monthly payment from a longer term often costs more overall. Always compare total repayable figures at the same loan amount.

Frequently Asked Questions

What credit score do I need for the best personal loan rate? The best personal loan rates (under 6% APR) are typically reserved for applicants with excellent credit scores, stable employment, and low debt-to-income ratios. Most mainstream lenders use reference agency scores from Experian, Equifax, or TransUnion. A score in the "excellent" or "very good" range (600+ on Experian's scale, 750+ on Equifax's scale) typically qualifies for the lowest rates.

Can I repay a personal loan early? Yes. Most personal loans allow early repayment, and doing so saves interest. However, some lenders charge an early settlement fee, typically equivalent to 1 to 2 months' interest. The Consumer Credit Act gives you the right to repay early at any time; if the lender charges an early settlement fee, they must calculate it using the actuarial method, not a flat penalty.

Is a personal loan better than a credit card for large purchases? For purchases over £5,000 that you cannot clear quickly, a personal loan usually has a lower interest rate than a standard credit card APR. Loans also have a fixed term and payment schedule, which makes budgeting easier. However, a 0% purchase credit card is often better for smaller amounts if you can clear the balance within the 0% period, as no interest is charged.

How does the loan amount affect my eligibility? Lenders often reserve their lowest rates for loans in a specific range, commonly £7,500 to £15,000. Borrowing slightly more than you need but within this sweet spot can sometimes result in a lower APR and a lower total cost. Run the calculator at both amounts to check whether the rate difference makes this worthwhile.

The £7,500 loan month by month

The page gives the monthly payment as approximately £232 on a £7,500 loan over 36 months at 7.4 percent. Running the amortisation schedule on those inputs gives £232.95 a month, and the split between interest and principal in the early months shows how the balance moves.

Across the first six months the borrower pays £1,397.71 and clears £1,137.63 of the balance. The other £260.09 is interest. The interest charge falls every month because it is calculated on a balance that the payment has already reduced, and the principal part of each payment rises by roughly £1.17 a month over this stretch.

The same loan across six terms

Length of term is the input with the largest effect on both the monthly figure and the total cost, and the two move in opposite directions.

Stretching from 24 months to 84 months cuts the payment by £222.49 a month, from £337.16 to £114.67, and adds £1,540.31 to the interest. The page makes the same point on the 36 and 60 month pair and gives the saving as £83 a month against £588 of extra interest. The schedule gives £83.02 a month and £609.42 of extra interest, so the monthly saving agrees almost exactly and the interest difference is £21 higher on the exact figures.

The page's rounded figures against the schedule

The page quotes £232 and £149 for the two payments, £8,352 and £8,940 for the totals, and £852 and £1,440 for the interest. Rebuilding the total from the rounded payment rather than from the exact one explains the difference: 36 payments of £232 come to £8,352 and 60 payments of £149 come to £8,940.

The exact payments are £232.95 and £149.93, so the totals on the exact schedule are £8,386.28 and £8,995.71. The gap is £34.28 over 36 months and £55.71 over 60 months, or about 95 pence a month on the shorter term. None of the page's printed figures is changed by this section, and every table above uses the payment the schedule actually produces.

What one point of APR costs

The representative APR on the page's example is 7.4 percent, and a lender's actual offer can easily land a point above or below it.

One point of APR is worth £3.46 a month and £124.45 over the 36 months. That is the number to weigh against a broker fee or a rate that looks marginally better on an advert, because a fee larger than the interest difference costs the borrower money even when the headline rate improves.

An arrangement fee added to the balance

Where a lender adds an arrangement fee to the balance, the borrower pays interest on the fee as well as repaying it, so the fee's true cost is above its face value.

A £150 fee added to the balance costs £167.73 over the term, which is £17.73 more than the fee itself. A £250 fee costs £279.54, which is £29.54 more. The gap grows with the term, so the same fee costs more on an 84 month loan than on a 36 month one. A fee paid up front instead of added to the balance removes that extra charge entirely, which is why the two quoting methods are not equivalent even when the fee amount matches.

Clearing it early with an extra £150 a month

Overpaying shortens the term and cuts the interest, and the effect is larger than the monthly figure suggests because every overpayment also removes the interest that the cleared balance would have accrued.

The overpayment clears the loan in 21 months instead of 36, cutting the interest from £886.28 to £542.00, a saving of £344.29. That is the arithmetic behind the page's FAQ on early repayment, and it holds before any early settlement fee the lender may charge. A fee of one or two months of interest, as the page describes, would absorb part or all of the £344.29 saving on a payoff late in the term, so the comparison has to be run on the actual settlement quote.

What the repayment schedule assumes

• Interest accrues monthly at one twelfth of the APR, and the payment falls at the end of each month.
• The rate is fixed for the whole term. A variable rate changes both the payment and the total.
• No payment is missed or made late, so no default interest or late fee enters the schedule.
• The arrangement fee, where one applies, is added to the balance at the start and is not paid separately.
• The APR is the rate actually applied. Where a lender quotes a flat rate rather than APR, the effective cost is close to twice the quoted figure, and the calculator needs the APR.
• Rounding is applied to the payment at the end of the calculation. Rounding the payment first and multiplying by the term reproduces the page's £8,352 rather than the schedule's £8,386.28.

Also try these free tools related to Personal Loan Calculator: - Loan Calculator

• APR Calculator