Loan Details
Enter your loan details on the left and click Calculate Repayments to see your results.
Understanding Loan Repayments and Interest
When you take out a personal loan, credit card balance or any form of borrowing, the lender charges interest on the outstanding balance. Understanding how that interest accrues — and how your monthly payments chip away at it — is one of the most valuable financial skills you can have.
APR vs Interest Rate — What's the Difference?
The Annual Percentage Rate (APR) is the standardised cost of borrowing expressed as a yearly percentage. It includes both the interest rate and any mandatory fees (such as arrangement fees), making it the fairest way to compare loans side by side. A loan may advertise a low interest rate but carry high fees, resulting in a higher APR. Always compare APRs, not headline rates, when shopping for a loan.
The nominal interest rate (also called the stated or flat rate) is purely the interest charged, without fees. This calculator uses the annual nominal rate to compute your monthly interest charge, which mirrors the way most UK personal loans are structured.
How Amortisation Works
A standard repayment loan uses an amortisation schedule. Each month, your payment is split into two parts: a portion that pays the interest that has accumulated since your last payment, and a portion that reduces the outstanding balance (the principal). In the early months, a larger share of your payment goes to interest — because the balance is high. As you pay down the principal, the interest portion shrinks and the principal portion grows. By your final payment, almost everything goes to principal.
This is why the repayment schedule table matters: it makes the amortisation process visible month by month, so you can see exactly when you cross the halfway point and how your balance falls over time.
Why Extra Payments Save Disproportionately More Early On
Because interest is charged on the outstanding balance, any extra payment you make reduces the balance immediately — and therefore reduces the interest charged in every subsequent month. An overpayment of £50 in month one might save you £200 in total interest over the life of the loan. The same £50 paid in month 50 saves far less, because the balance is already small.
This compounding effect means that even modest regular overpayments — say £25 or £50 a month — can cut years off a long-term loan and save a significant sum in interest. Use the Extra Monthly Payment slider above to see this effect in action.
Fixed Term vs Fixed Monthly Payment
Fixed Term loans are the most common type. You agree to repay over a set number of months (e.g. 36 or 60), and the monthly payment is calculated automatically to clear the debt in that time. Monthly payments are higher for shorter terms but you pay less total interest.
With a Fixed Monthly Payment approach (common with credit cards and some flexible loans), you choose how much to pay each month. Paying more than the minimum accelerates payoff dramatically. If your chosen payment is too close to the monthly interest charge, the debt barely reduces — which is why minimum payments on high-interest credit cards can take decades to clear.
Worked Examples
These examples illustrate the real cost of common UK debt scenarios using the same calculations as the tool above.
Credit Card — £5,000 at 24.9% APR, minimum payment only
Personal Loan — £10,000 at 6.9% APR, 48 months
Overpayment — £10,000 at 6.9%, paying £350/month instead of £238
Cost of Debt by APR
How APR affects your monthly payment and total cost on a £5,000 loan over 36 months.
| APR | Monthly (£5,000/36m) | Total Interest | Total Repaid |
|---|---|---|---|
| 6% | £152 | £472 | £5,472 |
| 10% | £161 | £800 | £5,800 |
| 15% | £173 | £1,244 | £6,244 |
| 20% | £186 | £1,695 | £6,695 |
| 25% | £199 | £2,154 | £7,154 |
| 39.9% | £230 | £3,285 | £8,285 |
Important Considerations
APR includes all mandatory fees as well as the interest rate, and shows the true annual cost of borrowing. The headline interest rate alone understates what you will pay. Always compare using APR when shopping for loans or credit cards — a lower rate with high fees can easily be more expensive than a slightly higher rate with no fees.
Paying only the minimum on a credit card (typically 2% of the balance or £25, whichever is higher) means your payment shrinks as the balance falls — and the bank earns maximum interest. A £5,000 balance at 24.9% APR on minimum payments alone takes around 34 years to clear and costs nearly as much again in interest. Always pay more than the minimum.
Transferring a credit card balance to a 0% promotional deal stops interest accruing during the offer period. However, most cards charge a transfer fee of 2–3% of the balance upfront. Factor this in and make sure you have a clear plan to repay the full balance before the 0% period ends — the revert rate is typically high (20%+ APR).
Some personal loans charge an early repayment fee — typically 1–2 months' interest — if you pay off the loan ahead of schedule. Even so, early repayment usually saves money overall on high-rate loans. Always check your loan agreement or ask your lender before making a large overpayment or settling the balance in full.