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Loan Calculator

Calculate monthly payments, total interest, and view detailed amortization schedules for any loan. Compare offers and plan extra payments.

Loan Type

Loan Details

£10,000
£500 £500,000
£
8.5%
0.5% 30%
% APR
5 years (60 months)
1 year 30 years
years
months
£0
£
Extra payments reduce total interest and shorten your loan term

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Smart Borrowing Tips

Compare APRsAlways compare the APR, not just the interest rate. APR includes fees and gives the true cost.
Pay ExtraEven £50/month extra can save thousands in interest and years off your loan.
Shorter TermsShorter loan terms have higher payments but much less total interest.
Credit ScoreA higher credit score gets you lower rates. Check yours before applying.
Read the Fine PrintCheck for early repayment penalties before signing any loan agreement.
Borrow Only What You NeedJust because you qualify for more doesn't mean you should borrow more.

Understanding Loans

How Are Monthly Payments Calculated?

Monthly payments are calculated using the standard amortization formula: M = P × [r(1+r)^n] / [(1+r)^n – 1], where P is the principal, r is the monthly interest rate, and n is the number of payments. This ensures equal monthly payments throughout the loan term.

What is Amortization?

Amortization is the process of spreading loan payments over time. In the early months, most of your payment goes toward interest. As the balance decreases, more goes toward principal. Our amortization schedule shows this breakdown for every month.

Fixed vs Variable Rate

Fixed-rate loans keep the same interest rate throughout the term, making payments predictable. Variable-rate loans may start lower but can increase over time. This calculator assumes a fixed rate for accurate projections.

How Extra Payments Help

Extra payments go directly toward reducing your principal balance. This means less interest accrues each month, creating a snowball effect. Even small extra payments can save thousands over the life of a loan and shorten your payoff time significantly.

Frequently Asked Questions

What is APR?

APR (Annual Percentage Rate) is the total yearly cost of borrowing, including interest and fees. It gives a more accurate picture of loan cost than the interest rate alone. Always compare APRs when shopping for loans.

Should I choose a longer or shorter loan term?

Shorter terms mean higher monthly payments but significantly less total interest. A 3-year loan at 8% costs much less in interest than a 7-year loan at the same rate. Choose the shortest term you can comfortably afford.

Can I pay off my loan early?

Most loans allow early repayment, but some charge early repayment fees (typically 1-5% of the remaining balance). Check your loan agreement. Our extra payment calculator shows how much you can save by paying more each month.

What credit score do I need for a good rate?

Generally, scores above 700 get the best rates. Scores of 650-700 get average rates. Below 650, rates increase significantly. Improving your credit score before applying can save thousands over the life of a loan.

Is this calculator accurate?

Yes! This calculator uses the standard amortization formula used by banks and lenders. Results are estimates based on the information you provide. Actual loan offers may vary based on your credit profile, fees, and lender terms.