What it does
This calculator estimates what a loan would cost you. Enter the amount you want to borrow, the advertised annual interest rate (APR) and how many years you would take to repay it, and you will see the monthly payment, the total interest you would pay, and the total amount repaid over the life of the loan.
It is a planning estimate, not a quote or a credit offer. Lenders advertise a representative APR — the rate at least 51% of accepted applicants receive — so the rate you are actually offered can be higher and depends on your circumstances and credit history. For impartial guidance on comparing real loan offers, see MoneyHelper's guide on how to compare loans.
How it works
A repayment loan is paid off in equal monthly instalments. Each payment covers the interest charged that month plus a slice of the amount you still owe, so the balance falls to zero by the end of the term. This is called amortisation. The fixed monthly payment is found with the standard amortisation formula:
Here P is the amount borrowed, r is the monthly interest rate (the annual rate divided by 12 and by 100) and n is the number of monthly payments (years × 12). If the rate is 0%, there is no interest and the payment is simply P ÷ n. Multiply the monthly payment by n to get the total repaid, and subtract P to find the total interest.
Worked example
Borrow £10,000.00 at 5.9% APR over 5 years. The monthly rate is 5.9 ÷ 100 ÷ 12, and there are 5 × 12 = 60 payments. Putting those into the formula gives a monthly payment of £192.86. Over the full term you repay £192.86 × 60 = £11,571.80, of which £1,571.80 is interest.
Common uses
- Personal loans: sizing the monthly cost of borrowing for a car, home improvement or consolidating debt before you apply.
- Comparing terms: a longer term lowers the monthly payment but increases the total interest — try a few terms to see the trade-off.
- Mortgages: the same amortisation maths drives a repayment mortgage, so you can sanity-check a rough monthly figure.
- Budgeting: checking that an estimated payment comfortably fits your monthly income before committing.
Frequently asked
What's the difference between APR and the interest rate?
The interest rate is the cost of borrowing the money itself. The APR (Annual Percentage Rate) also folds in certain compulsory fees, so it reflects the overall yearly cost and is the figure to use when comparing loans. This calculator treats the rate you enter as the annual rate applied monthly; if you have an APR that includes fees, entering it gives a slightly more cautious estimate.
Does overpaying reduce the total interest?
Usually, yes. Paying more than the required amount reduces the outstanding balance faster, so less interest is charged in the months that follow and the loan clears sooner. Check your agreement first, as some lenders apply early-repayment charges. This tool models the standard schedule without overpayments.
Why is the total interest so much higher over a longer term?
Interest is charged on the balance you still owe each month. A longer term means the balance stays high for longer, so even at the same rate you pay interest for more months — which is why stretching a loan out lowers the monthly payment but raises the total cost.
Is this a loan quote?
No. It is an estimate to help you plan. The actual rate, payment and total cost come from the lender once they assess your application. Before borrowing, read the lender's figures and the MoneyHelper guide linked above. You can read how we build and check these tools on our how we build and verify tools page.