Loan Interest Calculator
Enter your loan details below to calculate your monthly repayment, total amount repaid, and total interest charged. The year-by-year table shows how your outstanding balance reduces over time.
Loan details
Uses the standard annuity (amortisation) formula for fixed monthly repayments.
Related: Loan Repayment · APR Calculator
How the loan interest calculator works
This calculator uses the standard annuity (amortisation) formula to work out a fixed monthly repayment for a capital-and-interest loan. At the start of the loan, the majority of your payment covers interest. Over time, as the balance reduces, the interest portion shrinks and more of each payment goes toward the principal — this is why the year-by-year table shows the outstanding balance falling more quickly in later years than in earlier ones.
When comparing UK personal loans, always look at the Annual Percentage Rate (APR) rather than the headline interest rate, as APR includes fees and charges and gives a true cost of borrowing. Representative APRs for mainstream personal loans in the UK typically range from 6% to 15%, though the rate you are offered will depend on the loan amount, term, and your credit profile. Lenders are required to offer the representative APR to at least 51% of approved applicants.
The year-by-year breakdown in this calculator is particularly useful for understanding how much interest you pay at different stages and how much you still owe. If you are considering paying off a loan early, your lender must provide a settlement figure on request under the Consumer Credit Act.
Frequently asked questions
How is loan interest calculated?
Most UK personal loans use a reducing balance (amortisation) method. Each month, interest is calculated on the remaining outstanding balance, so the interest portion of your payment decreases over time while the principal portion increases. Your monthly payment stays the same throughout the term. The total interest you pay depends on the loan amount, the annual interest rate, and the length of the term.
What is the difference between flat rate and reducing balance interest?
With a flat rate, interest is calculated on the original loan amount for every period, regardless of how much you have repaid. With a reducing balance (the standard method for UK personal loans), interest is charged only on the remaining balance, meaning you pay less interest as the loan is paid down. A flat rate of, say, 5% is therefore significantly more expensive in practice than a reducing balance rate of 5%.
What APR should I expect on a personal loan?
Personal loan APRs in the UK vary widely depending on the amount borrowed, the term, and your credit profile. Borrowing between £7,500 and £15,000 from a mainstream lender typically attracts rates between 6% and 10% APR for applicants with good credit. Smaller loan amounts, longer terms, or a lower credit score can push the APR significantly higher. Always compare the representative APR across lenders.
Can I reduce the interest I pay on a loan?
Yes. You can reduce the total interest paid by choosing a shorter loan term, making overpayments where your lender allows (check for early repayment charges), or by paying off the loan in full early. Improving your credit score before applying can also help you qualify for a lower APR. Comparing lenders using eligibility checkers — which use soft searches that do not affect your credit file — is a good starting point.