Personal Loan Repayment Calculator
Work out the monthly repayment on a personal loan and see how much of what you pay back is interest.
- Capital (84.4%)
- Interest (15.6%)
For every £1 you borrow, you'll pay back about £1.19 over the term.
- Capital
- Interest
Year 1 of the loan is roughly 26.8% interest; by year 5 that drops to about 3.6%.
| Year | Paid | Interest | Capital | End balance |
|---|---|---|---|---|
| 1 | £2,371 | £636 | £1,735 | £8,265 |
| 2 | £2,371 | £513 | £1,858 | £6,407 |
| 3 | £2,371 | £380 | £1,991 | £4,417 |
| 4 | £2,371 | £238 | £2,132 | £2,284 |
| 5 | £2,371 | £86 | £2,284 | £0 |
Information
A UK personal loan is an unsecured, amortising loan: you borrow a fixed amount and repay it in equal monthly instalments over a fixed term, usually 1 to 7 years. Each instalment covers the interest that has accrued since the previous payment, and the rest reduces the balance you still owe. The lender sets the level payment so that, paid every month for the full term, the loan is exactly cleared by the final instalment. The calculator above uses the same daily-compounding arithmetic: interest accrues each day on the balance still owed, and the APR you type is treated as the effective annual rate, so the realised yearly accrual matches what a lender would quote.
Why the early payments are mostly interest. Year 1 starts with the whole loan still outstanding, so the interest charged that year is at its largest and the interest share of each payment is highest; how large that share is depends on your rate and term, and the chart above shows your exact first-year figure. As the balance falls the interest share shrinks and the capital share grows, so by the final year almost every pound of each payment reduces the principal. The breakdown makes this visible.
APR, and comparing deals. Lenders advertise a representative APR, which is the rate at least 51 in every 100 accepted borrowers receive; your own rate can be higher depending on your credit profile and the amount and term you choose. Because the APR folds the interest rate together with certain compulsory charges into a single yearly figure, it is the fairest number to compare quotes with, which is exactly what this calculator uses.
Overpaying and settling early. Interest only accrues on the balance still outstanding, so paying more than the required instalment, or clearing the loan early, cuts the total interest. Under the Consumer Credit Act you have the right to settle a regulated personal loan early, and the lender can charge at most 58 days' interest as an early-settlement fee. Check your agreement for the exact terms before you overpay.
What's not in this calculator. Arrangement or product fees, optional payment-protection insurance, missed-payment charges, and any change to a variable rate. This calc uses one fixed rate for the whole term, which is how the great majority of UK personal loans are priced. For the all-in cost of a specific product, read the lender's pre-contract information.
FAQ
- How is the monthly repayment calculated?
The monthly repayment is the level amount that, paid every month for the full term, exactly clears the loan including interest. Lenders use a standard amortisation formula ("PMT") that compounds at the daily rate (1 + APR)1/365 − 1, so the realised yearly accrual matches the rate you typed. Early in the term most of each payment is interest; late in the term most is capital; the year-by-year breakdown below shows the split.
- Is APR the same as the interest rate?
Not quite. The APR (Annual Percentage Rate) rolls the interest rate together with certain compulsory charges into one yearly figure, so it is the fairest number to compare deals with. The "representative APR" a lender advertises is the rate at least 51% of accepted borrowers get; your own rate can be higher. This calculator treats the APR you enter as the effective annual cost of the loan, which is the right basis for comparing quotes.
- Why is so much of my early payment interest?
Each month's interest is charged on the balance still outstanding at the start of that month. In year 1 the whole loan is still on the books, so the interest portion of each payment is at its largest; how large that share is depends on your rate and term, and the chart shows your exact first-year figure. As the balance falls the interest shrinks and more of each payment chips away at the capital, so by the final year almost all of it is capital. The breakdown table makes this visible.
- Can I pay a personal loan off early?
Almost always, yes. Under the UK Consumer Credit Act you have the right to settle a regulated personal loan early, and the lender can charge at most 58 days' interest as an early-settlement fee. Clearing the loan sooner, or overpaying each month, cuts the total interest because interest only accrues on the balance that is still outstanding. Check your agreement for the exact early-settlement terms before you commit.
Sources
- Bank of England: Money and Credit statistics (Bank of England)
- Bank of England: Bank Rate (Bank of England)
Disclaimer
Not financial advice. The monthly repayment figure is arithmetic on the inputs you provided. A lender's actual offer will include the specific rate you are approved for plus any product fees or optional insurance that don't show up here. Consult a qualified adviser and read the lender's pre-contract information before making a decision based on these numbers.
