Loan Calculator UK

How to use our loan repayment calculator

It’s free, quick and straightforward to use our loan calculator, and it won’t affect your credit score.

You simply need to input:

• the amount you want to borrow
• the number of months you want to borrow over
• and the annual percentage rate (APR) of the loan.

When you’re ready, click “calculate” to see how much your monthly repayments would be and the amount you would repay overall, based on the information you provide.

You can adjust these fields to see how they affect your monthly payment and the total amount you repay.

The calculator assumes the interest rate remains fixed for the duration of the term.

If you’re not sure what interest rate you may be charged, you can visit our personal loans chart to see the representative APR of each lender. However, bear in mind you’re not guaranteed to receive this rate, so you may be charged a higher rate of interest if you eventually apply for a loan.

How accurate is this calculator?

Our loan calculator provides an accurate result, based on our formula and the inputted figures.

However, because lenders may calculate repayments using their own, individual formulas or charge interest in slightly different ways, the monthly repayment figure and total amount repayable displayed by our calculator may not exactly match those you see if you apply for a loan.

It’s best to treat this loan calculator as a guide to how much a loan could cost you. You can see your actual monthly repayment and the total cost when you check your eligibility and formally apply for a particular loan.

Limitations of loan repayment calculators

A UK loan repayment calculator can be a useful guide for those planning to take out a loan, but there are some limitations as they’re not tailored to your individual situation.

For example, some factors which could affect the usefulness of a quick loan calculator include:

• You may not know the exact interest rate you would be charged until you actually apply for a loan. This means the monthly payments and total interest charged may be different to the sums indicated on the calculator.
• It doesn’t consider your credit score, income or overall financial situation (unlike when you apply for a loan). So, even if you think the monthly payments shown on the loan calculator are affordable, there’s no guarantee a lender will approve your loan application.
• It won’t account for any changes made during the loan term, such as changing the payment date, taking a payment holiday or making an overpayment, for example.
• If your situation is more complex, a standard loan interest calculator may be of limited use.

These limitations are why it’s always worth getting a more personalised quote before formally applying for a loan. Like a loan calculator, getting a quote or checking your eligibility won’t affect your credit score but, because it considers your individual situation, it will provide a more accurate indication of your chances of getting approved for a loan (and at what interest rate).

Why should I use a loan repayment calculator?

It’s a good idea to use a calculator before applying for a loan for a number of reasons.

• It can help you work out what loan size and term to apply for, by showing you if you could realistically afford the payments.
• You can see how changing the term could affect the loan, whether you’re trying to lower the monthly payments or reduce the total amount you repay.
• You can use the calculator as many times as you want without affecting your credit score.
• It means you don’t need to spend time working out the cost of a loan and the potential monthly repayments yourself.
• A loan calculator could stop you from applying for a loan you can’t afford or give you confidence in being approved if it shows the monthly payments would be comfortably within your budget.

Taking out a loan you can’t afford could put a strain on your finances as you try to cover the monthly payments and, in a worst-case scenario, you could default on the loan. This could have serious consequences for your credit history and your overall financial situation.

Examples of using a loan repayment calculator

Example one: Someone wants to borrow £8,000 to pay for some bathroom refurbishments. They have a good credit history and want to pay off the loan as quickly as possible. To see their estimated monthly repayments, they use the loan calculator and adjust the loan term to see the shortest term they could get while still being able to afford the payments.

Example two: Someone wants to buy a car, and they’re wondering whether it would be cheaper to take out a personal loan or a form of car finance. They use the loan calculator to get a rough guide of how much a loan would cost in total and what the monthly payments could be, compared to using a car finance agreement.

What factors can affect your loan repayments

Several factors can affect the size of your monthly loan repayments including:

• the amount you borrow
• the interest charged by the lender
• your loan term.

Because your credit history and overall financial situation can influence the interest rate you receive from the lender, they will also indirectly affect the size of your loan repayments.

The table below is an illustration of the impact your credit score could have on your monthly loan repayments, based on a loan of £5,000 borrowed over a term of three years.

Note that the APR figure for each credit score won’t necessarily reflect the APR you may be charged should you apply for a loan with that credit rating.

These figures are calculated using our loan calculator. *is a typical APR and this rate may vary.

How long should my loan term be?

It’s up to you how long your loan term is, as it depends on how long you want to be paying off your loan and how much you can afford to repay each month. You may be able to borrow a personal loan over up to seven (or even 10) years but, as a rule, you should typically aim to have as short a term as possible so you pay less interest overall.

A shorter loan term means your monthly payments will be higher but, as long as they are manageable and you can comfortably afford them, this will save you money in the long run.

While some borrowers may be tempted to choose a longer loan term so their monthly payments are smaller, this means you’ll pay more interest overall.

The table below shows the effect that different loan terms can have on a loan of £5,000 with an APR of 9.9%.

These figures are calculated using our loan calculator.

Why APR matters

The APR is important because it allows borrowers to compare the cost of personal loans on a like-for-like basis.

This can make it easier to find the cheapest option, as it means you don’t need to check for any fees that may be charged alongside the interest.

For example, it could be difficult to work out whether a loan with a low interest rate and a high fee is more or less expensive than a loan with a higher interest rate but no fee. The APR removes this complication as it takes both factors into account to show you the annual cost of a loan.

The Financial Conduct Authority (FCA) sets certain rules that lenders need to follow to calculate their APR, to ensure firms display the cost of their loans in a consistent and transparent way. This means you don’t need to spend time working out the APR yourself with an APR finance calculator; the lender will always do this for you and tell you the APR you qualify for.

APR vs. interest rate: What’s the difference?

While the interest rate and APR both tell you how much a loan will cost, the APR includes the cost of any fees in addition to the interest.

This means that the APR and interest rate on a loan could be the same if the lender doesn’t charge any fees.

However, if a loan does come with a fee, the APR will be higher than the interest rate and provide a more accurate reflection of the total cost of the loan.

How to work out APR

The Financial Conduct Authority (FCA) sets certain rules that lenders need to follow to calculate their APR, to ensure firms display the cost of their loans in a consistent and transparent way.

This means you don’t need to spend time working out the APR yourself with an APR finance calculator; the lender will always do this for you and tell you the APR you qualify for.

All lenders need to display a representative APR, but not every borrower will receive this rate. Once you apply for a loan, the lender will show your personal APR, which is determined by your individual situation and requirements and is the rate you will be charged.

Loan types

There are several types of loans available, including:

• Personal loans: Also known as unsecured loans, these don’t require any form of security.
• Secured loans: You need to put forward your home or another valuable item as security for a secured loan. The lender may repossess this property if you default on the loan.
• Unsecured loans for bad credit: These are like personal loans except they are specifically designed for borrowers with poor credit histories. Bad credit loans are likely to charge a higher rate of interest than standard personal loans.
• Secured loans for bad credit: These are simply secured loans designed for those with bad credit scores. Lenders may be more willing to offer secured loans to borrowers they perceive as “higher risks” because the property (or item used as collateral) gives them extra security. However, there can be serious consequences if the borrower falls behind on payments.
• Guarantor loans: These are a type of unsecured loan, but the borrower will name another individual as guarantor on the loan agreement. The guarantor agrees to repay the loan if the borrower is unable to.

Assessing loan affordability

Before offering someone a loan, lenders need to run checks to ensure the borrower can afford to repay it. The FCA sets guidelines on how to do this, but each lender may have slightly different processes in place to check an applicant’s affordability.

To work out whether you can comfortably afford the loan repayments, lenders are likely to check your income, employment status, and regular expenditure (such as rent or mortgage payments and childcare). They will also look at your existing debt commitments and your debt-to-income ratio (DTI), which is simply the proportion of your monthly income that goes towards paying off debt.

While there isn’t a specific DTI ratio that is considered “too high” for a loan, if a lender believes you couldn’t afford the repayments on top of your existing commitments, and that the loan could push you into financial difficulties, it won’t approve the application.

Separately, most lenders will also run a credit check to see how borrowers are currently managing, and have previously managed, their finances, including any late or missed payments, for example. This will contribute to a lender’s decision on whether to approve a loan (and what interest rate to charge), but a borrower’s income and expenditure will be crucial to determining their affordability.

How to improve my chances of being accepted for a loan

If you’ve used the loan calculator and decided to apply for a loan, you could improve your chances of approval by:

• Checking and improving your credit score. It’s a good idea to look at your credit score with the three main credit reference agencies (Experian, Equifax and TransUnion) to check if there’s anything that could affect your loan application. Lenders may be more likely to approve an application and offer a lower interest rate to borrowers with a better credit history. See our guide for tips on how to improve your credit score.
• Managing your existing credit commitments. Ensure you make the required payments on your credit card, mortgage and any other credit facilities as this indicates to lenders that you can be trusted to pay off the loan in full and on time.
• Check the amount of debt you have. If you have too much debt on existing loans, credit cards or overdrafts, lenders may be wary about offering you another loan.
• Have a reliable income. Having a steady income that will allow to comfortably afford the loan repayments is likely to help your application.
• Checking your eligibility. You can see your chances of approval for a loan by checking your eligibility before applying.

FAQs

Why are loan repayments important?

Loan payments are important because they have a direct impact on your credit score and, consequently, your financial situation. Late or missed payments could negatively affect your credit score and cause more serious consequences for your finances, affecting your ability to get credit in the future, for example.

What happens if I miss a loan repayment?

If you miss a loan payment, this is likely to be recorded on your credit file and could harm your score. The lender may also charge a penalty fee.

Can I change my loan repayment date?

Yes, many lenders allow you to change the repayment date of your loan, although this may be subject to certain terms. For instance, you may only be able to change it a maximum number of times per year, and you may not be able to select certain dates. You can typically request a change to your repayment date by contacting the lender or by changing it yourself online or via their mobile app, for example.

What is the impact of changing my repayment schedule?

Changing your loan repayment date could potentially affect the amount of interest charged. Check with the individual lender before changing your repayment schedule to see what the impact would be.

How to calculate interest on a loan

Interest on an unsecured personal loan is charged as a percentage of the amount borrowed, with most lenders charging a fixed rate of interest. This means you’ll pay the same rate of interest for the whole loan term.

Lenders may calculate and charge interest in slightly different ways, which can make it difficult to work out yourself how much interest you could be charged. Instead, it’s worth considering a free personal loan calculator UK consumers can use to get a rough guide of how much interest is charged and how much a loan could cost. Then, when you’re ready to check your eligibility or apply for a loan, the lender will tell you the exact amount of interest it will charge. Always check the total amount repayable before taking out a loan.