Personal Loan Calculator

A personal loan is repaid in fixed monthly instalments over an agreed term, typically one to seven years. Each payment covers a portion of the principal plus interest. The interest is usually calculated on the reducing balance, meaning you pay less interest as the outstanding amount shrinks.

Lenders advertise a representative APR, which at least 51% of approved applicants must receive. Your actual rate depends on your credit score, income and the loan amount. Rates tend to be lowest in the £7,500–£15,000 range and higher for smaller or larger sums.

This calculator uses the standard annuity formula to compute your monthly repayment, total interest and overall cost. Adjust the loan amount, term and interest rate to compare different scenarios side by side.

Why your offered APR may be higher than advertised. Under FCA CONC 3.5, lenders only need to offer the advertised 'representative APR' to 51% of accepted applicants — the other 49% can be offered a higher rate based on their credit score, income, and existing debt. Always do a soft search through MoneySavingExpert's Eligibility Checker, ClearScore, Experian, or CompareTheMarket before applying — soft searches don't damage your credit score and show your likely acceptance odds and personalised rate. Hard searches (full applications) leave a footprint for 12 months and reduce your score 5-10 points per search.

Personal loan vs 0% credit card vs overdraft. For short-term borrowing (1-2 years) under £5,000, a 0% purchase credit card is usually cheapest if you can clear the balance before the promo ends (typically 18-24 months). For larger amounts (£5,000-£25,000) over 2-7 years, personal loans typically win at 8-15% APR. Authorised overdrafts are required to charge a single APR since April 2020 reforms and are usually the most expensive at 35-40% EAR — only use for genuine short-term emergencies. Credit union loans (e.g. London Mutual, Hoot, Plane Saver) typically charge 12.7-26.8% APR and are often available to those with poor credit.

Early repayment rights and charges. Under the Consumer Credit Act 1974, you have a statutory right to repay a personal loan early at any time. Lenders may charge an Early Repayment Charge (ERC) of up to one month's interest plus 28 days (for loans under £8,000) or 1% of the amount repaid (for loans of £8,000 or more). For most borrowers, early repayment still saves significant total interest — particularly on long-term loans where most of the early payments are interest, not principal. Check your loan agreement before paying off — your lender must provide a settlement quote within 14 days of request.

Secured vs unsecured loans. Personal loans are unsecured — based purely on your creditworthiness. Secured loans (or 'homeowner loans') use your home as collateral, allowing larger amounts (£10,000-£500,000+) and longer terms (up to 30 years) at lower rates (5-10%), but if you default, the lender can force the sale of your home. Logbook loans secured on cars are extremely high-cost (typically 200%+ APR) and not regulated under the Consumer Credit Act — never recommended. Always prefer unsecured personal loans even if the APR is higher, unless you fully understand the consolidation maths.

When debt consolidation makes sense — and when it doesn't. Consolidating multiple debts into one personal loan can reduce monthly payments and simplify finances, but it only saves money if (1) the new APR is lower than the weighted average of your old debts, AND (2) you don't extend the repayment term so much that you pay more total interest. A common trap: consolidating credit card debt (clearing in 3 years at 22% APR) into a 7-year personal loan at 12% APR — the lower rate is offset by paying interest over more than double the time. Use this calculator's term comparison to check. And critically: stop using the old credit cards once cleared.