Personal Loan Calculator UK
A personal loan is a fixed commitment — the same amount leaves your account every month for the full term. This tool shows you the true cost, the affordability signal, early repayment impact, and what happens if you overpay.
A personal loan uses a reducing balance method — interest is charged each month on the outstanding balance, which falls with each repayment. This means interest costs are highest in the early months (when the balance is largest) and reduce gradually throughout the term. By the final months of the loan, almost all of each payment is clearing the remaining capital.
On a £10,000 loan at 6.9% APR over 5 years, your monthly payment is £197. In month one, around £58 of that is interest and £139 clears capital. By month 50, only £3 is interest and £194 clears capital. The total interest paid over the full term is approximately £1,820 — meaning you repay £11,820 to borrow £10,000. This front-loading of interest is why early repayment or a shorter term saves meaningfully.
Extending a loan term reduces the monthly payment but significantly increases total interest paid. On a £10,000 loan at 6.9% APR: a 3-year term costs £308/month with £1,087 total interest. A 5-year term costs £197/month with £1,819 interest. A 7-year term costs £150/month but costs £2,640 in interest. The monthly saving between 3 and 7 years is £158 — but the additional interest cost is £1,494.
The right term depends on your cash flow. If the lower monthly payment is genuinely needed to keep the loan affordable and sustainable, a longer term may be justified. But if your budget allows for a shorter term, the interest saving is guaranteed and risk-free. The optimisation section in the results above models one year shorter than your chosen term — this is often the highest-value adjustment available.
APR (Annual Percentage Rate) is the standardised measure of borrowing cost required by UK law. It includes the interest rate plus any mandatory fees (arrangement fees, account fees) expressed as an annual rate, allowing like-for-like comparison between lenders. Under FCA rules, lenders must quote a representative APR — the rate available to at least 51% of successful applicants. The rate you are personally offered may be higher based on your credit profile.
APR does not include optional insurance products (such as payment protection insurance), early repayment charges, or late payment fees. For a clean total-cost comparison, the calculator's total interest figure at your quoted APR is the most relevant number — it represents the minimum cost of the loan assuming you make all payments on time and do not take any add-ons.
Under the Consumer Credit Act, you have the right to repay a personal loan early at any time. Lenders can charge an early repayment charge (ERC) of up to 58 days' interest on the outstanding balance if more than 12 months remain, or 28 days' interest if less than 12 months remain. For most personal loans at typical APRs, this ERC is small relative to the interest saved — particularly if you settle early in the loan term when the balance (and remaining interest) is highest.
The early repayment tool in the results above shows the balance remaining and interest saved at any point during the term. If you receive a windfall, bonus, or have surplus savings, early partial or full repayment is almost always the right mathematical decision when your loan APR exceeds your savings rate — which is the case for most personal loans compared to cash savings accounts.
A personal loan is not always the cheapest way to borrow. For amounts under £5,000, a 0% purchase credit card (with a clear repayment plan) can cost nothing in interest if cleared within the promotional period. For home improvements, a secured loan against your property typically carries a lower rate — though with the risk of losing your home if you cannot repay. For existing credit card debt, a 0% balance transfer card often reduces total interest paid more effectively than consolidating into a personal loan.
The right borrowing product depends on the amount, purpose, repayment timeline, and your credit profile. Personal loans make most sense for fixed-purpose borrowing (a specific purchase or debt consolidation) where you want predictable monthly payments and a clear end date, and where the APR offered is competitive relative to alternatives.