How this calculator works
Enter your loan amount, APR and term, and this tool builds the same repayment schedule your lender uses internally: a fixed monthly payment where more of each instalment goes toward interest early on and progressively more toward the capital as the balance shrinks. That's why paying off a loan feels slow at first and speeds up noticeably toward the end.
APR (Annual Percentage Rate) is the figure to compare loans on, not the headline interest rate. UK law requires lenders to show it because it folds in compulsory fees alongside interest, giving you one number that reflects the true annual cost regardless of how a lender structures their pricing.
Some car finance and hire purchase deals quote a "flat rate" instead of APR, since it looks smaller. This calculator converts a flat rate to an approximate APR automatically, and it's a genuinely useful comparison, but treat it as an estimate rather than an exact figure, the true APR depends on the precise payment schedule your finance agreement uses. Always check the APR stated on your actual credit agreement before signing, since that's the legally binding figure.
Choosing Interest Only changes the maths completely: your monthly payment covers only the interest charged that month, and the full amount you borrowed is still owed in full at the end of the term. This is common for some mortgages and certain types of bridging finance, but it means you need a separate plan for repaying the capital itself.
Overpayments reduce your balance directly, which means every future month charges interest on a smaller amount, cutting both your total interest and how long the loan takes to clear. The calculator shows both effects together whenever you enter an overpayment amount.
Understanding your inputs
Loan Amount is the amount you're borrowing, not including any deposit you've already paid.
Loan Type changes the default APR shown to a broadly representative starting point for that type of borrowing, and switches on the flat rate field for car finance, where flat rates are common. Whichever type you choose, replace the default with the actual APR from your offer once you have it.
Repayment Term is how long you have to repay. Longer terms lower your monthly payment but increase the total interest you pay overall, since you're carrying a balance for longer.
Repayment Type is Capital + Interest for the vast majority of loans, where your balance reduces every month. Choose Interest Only only if you know that's genuinely how your agreement works.
Monthly Overpayment and the Affordability Check are both optional. The affordability check compares your monthly payment to your take-home pay, our take-home pay calculator can give you that figure if you don't already know it.
Worked example
Take a £10,000 personal loan at 6.9% APR over 3 years, this calculator's own defaults and a genuinely representative rate for that loan size, matching the Bank of England's own reported average for Q1 2026.
The monthly payment comes to £308.31. Over the full 36 months you'll pay £1,099.30 in interest, for a total repayable of £11,099.30. Add a £50 monthly overpayment and the picture changes meaningfully: you'd clear the loan in 31 months instead of 36, five months earlier, and total interest drops to £931.64, a saving of £167.66. That's the compounding effect of overpayments in miniature, less balance outstanding means less interest charged every single month from that point on.
Typical UK borrowing costs, for context
| Loan type | Typical APR range |
|---|---|
| Personal loan (£10,000, good credit) | 6.5%–12% |
| New car finance | 6.5%–9% |
| Used car finance | 7%–12% |
| Credit card (revolving balance) | ~25% average |
These are broad market ranges, not quotes, your own rate depends on your credit profile, the lender, and the exact product. Lenders are only required to give their advertised "representative APR" to 51% of accepted applicants, so the rate you're personally offered can be noticeably different from the one in an advert.
Ask your lender: whether there's an early repayment charge before you commit to regular overpayments. Most personal loans allow some penalty-free overpayment each year under UK consumer credit rules, but the exact allowance varies, and it's worth confirming in writing before you rely on it.
Common Mistakes
The most common one is comparing loans by monthly payment alone rather than total amount repayable. A longer term with a lower monthly payment can genuinely cost more overall, sometimes substantially more, even at an identical or lower APR, simply because you're paying interest for longer.
Another is confusing a flat rate with APR when comparing car finance deals. A "3.5% flat rate" sounds far cheaper than a "6.9% APR" personal loan, but they can represent a genuinely similar true cost, the flat rate figure is structured differently, not smaller in reality.
People also commonly assume the representative APR advertised is the rate they personally receive. It only has to be offered to just over half of successful applicants, so a weaker credit profile than average, or a smaller loan amount than the advertised example, can both mean a noticeably higher personal rate.
Finally, overlooking early repayment charges is a real cost that catches people out. Before committing to large or regular overpayments, check your agreement doesn't penalise them, since some fixed-rate deals, particularly mortgages, charge a fee for repaying ahead of schedule.
Sources and verification
Figures verified against the Bank of England and current UK lender market data on 03 September 2026.
APR disclosure requirement: Consumer Credit Act 1974 and FCA rules. Personal loan representative APR (6.9% average, £10,000, Q1 2026): Bank of England statistics. Typical car finance and credit card APR ranges: current UK market data, cross-checked against multiple lenders. These are general market context, not individual loan offers, and your own rate will depend on your circumstances.