Loan Repayment Calculator UK 2025
Calculate monthly loan repayments, total interest, and see a full amortisation schedule. Also: find out how much you can borrow based on your monthly budget.
How Loan Repayments Are Calculated
UK personal loan repayments are calculated using the standard amortisation formula, which ensures each monthly payment is equal over the life of the loan. Every payment covers the month's interest on the outstanding balance, plus a portion of the principal. As the balance reduces each month, less interest accrues and more of each payment reduces the capital.
The Amortisation Formula
The monthly payment formula is:
where P = principal, r = monthly rate (APR÷12), n = number of months
For example, a £10,000 loan at 6.9% APR over 5 years (60 months): monthly rate = 6.9% / 12 = 0.575%. Monthly payment = £10,000 × [0.00575 × (1.00575)⊃60] / [(1.00575)⊃60 − 1] = £197.47.
Understanding Your Amortisation Schedule
The amortisation schedule shows how each payment is split between interest and principal for the first 12 months. In the early months of a loan, the majority of your payment goes towards interest rather than reducing the debt. This is because interest is calculated on a higher outstanding balance. As you pay down the principal, the monthly interest charge falls and more of each payment reduces your debt. By the final months of the loan, almost all of each payment is principal repayment.
Typical UK Personal Loan Rates 2025
UK personal loan interest rates vary by loan size, term, and credit score:
- £1,000–£2,999: Representative APR 20–30%
- £3,000–£4,999: Representative APR 10–20%
- £5,000–£9,999: Representative APR 6–12%
- £10,000–£25,000: Representative APR 5–8% (best rates)
- £25,000+: May require secured borrowing; rates vary
These are indicative. Your actual rate depends on your credit profile. A representative APR is offered to at least 51% of successful applicants.
Loan Terms: Shorter vs Longer
Choosing a shorter loan term means higher monthly payments but significantly less total interest paid. A longer term reduces your monthly payments but costs more overall. For example, £10,000 at 6.9% APR: over 3 years the monthly payment is £308, total interest £1,086. Over 7 years the monthly payment is £151, but total interest rises to £2,672 — more than double. Our calculator makes this trade-off instantly visible.
Early Repayment
Most UK personal loans allow early repayment. Under the Consumer Credit Act 1974, lenders can charge an early repayment fee of up to one or two months' interest (maximum 1% of the outstanding balance if more than 12 months remain). If you can pay off your loan early and the fee is modest, you may still save money on interest. Use this calculator to understand your current interest cost before deciding.
Secured vs Unsecured Loans
Personal loans shown in this calculator are unsecured. They do not require property as collateral and are based on creditworthiness alone. Secured loans (such as homeowner loans) use your property as security, allowing larger loan amounts and lower rates, but risking your home if you cannot repay. Car finance (PCP and HP) is a form of secured lending against the vehicle. Always consider whether the asset could be lost if circumstances change before choosing a secured loan.
Frequently Asked Questions
Monthly loan payments are calculated using the standard amortisation formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. This formula ensures each payment is equal and the loan is fully repaid by the end of the term. Early payments are mostly interest; later payments are mostly principal.
APR (Annual Percentage Rate) includes both the interest rate and any mandatory fees or charges, expressed as a single annual percentage. The nominal interest rate covers only the interest on the loan, without fees. UK lenders are legally required to display the representative APR. When comparing loans, always compare APR rather than just the headline interest rate, as fees can add significant cost.
A personal loan (unsecured) does not require you to put up an asset as security. If you default, the lender cannot automatically seize your home. Interest rates are typically 3–30% APR. A secured loan is backed by an asset, usually your home — rates are lower, but defaulting could mean losing your property. UK personal loan amounts typically range from £1,000 to £50,000 over 1–7 years.
Yes. UK borrowers have the right to repay personal loans early under the Consumer Credit Act. Lenders can charge an early repayment fee of up to 1–2 months' interest if you repay in the final year. The maximum early repayment charge is 1% of the outstanding amount if 12+ months remain. Early repayment can save significant interest if the charge is modest compared to remaining interest.
UK lenders use credit scores (Experian, Equifax, TransUnion) to assess risk. Borrowers with excellent credit typically receive rates close to the advertised representative APR. Those with fair or poor credit may receive higher rates or be declined. Lenders must offer the advertised representative APR to at least 51% of successful applicants. Check your credit report free via Experian, Clearscore (Equifax) or Credit Karma (TransUnion).
Amortisation is the process of paying off a loan through regular fixed payments. In early months, a larger proportion of each payment goes towards interest. As the balance decreases, the interest portion falls and more goes towards principal. Our calculator shows this breakdown for the first 12 months, helping you understand how much of your debt you actually reduce each month.
Use the "How Much Can I Borrow?" tab above. Enter your maximum monthly payment, interest rate, and term to see the maximum loan amount. As a rule of thumb, total monthly debt repayments should not exceed 30–35% of your take-home pay. Lenders also conduct affordability checks based on income, expenditure, and existing commitments, so the calculator result is a guide only.