Personal Loan Calculator — Monthly Payment & Total Cost

Personal Loan Guide

How Loan Payments Are Calculated

Monthly payment = P × r(1+r)ⁿ / ((1+r)ⁿ−1). Where P = loan amount, r = monthly interest rate (APR ÷ 12 ÷ 100), n = total months. A £10,000 loan at 6.9% APR over 3 years: r = 0.069/12 = 0.00575 per month. n = 36 months. Monthly payment = £308.82. Total repaid = £308.82 × 36 = £11,117. Interest = £1,117 (11.2% of loan). Early in the loan, most of each payment is interest. Later, more goes to principal — this is the amortisation schedule.

APR and True Loan Cost

APR (Annual Percentage Rate) includes the interest rate plus all mandatory fees — it is the legally required comparison figure for UK loans. Always compare APRs, not just headline rates. Representative APR: lenders must offer the advertised rate to at least 51% of accepted applicants — you may be offered a higher rate based on your credit score. The best personal loan APRs in 2024: 5.5-7.5% for good credit borrowers. Credit card rates: 20-30%+ APR for purchases, higher for cash. Payday loans: ef

Secured vs Unsecured Loans

Unsecured personal loans: no collateral required. Higher rates than secured. Used for: car purchase, home improvement, debt consolidation, major purchases. Secured loans (against property): lower rates (typically 5-10% for good credit, since lender risk is reduced). Risk: if you default, your home can be repossessed. Used for: large amounts, long terms, those with poor credit who can offer security. Credit cards (Section 75 protection): for purchases between £100 and £30,000, credit cards offer

Should You Take a Loan?

Before borrowing, consider alternatives: savings — using savings avoids interest entirely and is always cheaper unless savings interest exceeds loan cost (rare). 0% purchase credit card — often the cheapest way to borrow for purchases if cleared within the promotional period. Interest-free employer/credit union loans — check if available. Loan purpose matters: borrowing to buy a depreciating asset (car, consumer goods) adds permanent cost. Borrowing to buy an appreciating asset or for education/