How to calculate loan repayments
A personal loan is amortised just like a mortgage: fixed monthly payments covering interest plus capital. Total interest depends far more on the term than most people expect — a longer term lowers the payment but raises the total cost.
The rule
Monthly payment = P × r ÷ (1 − (1 + r)^−n); total interest = (payment × n) − P
Do it automatically — Loan calculatorStep by step
- 1Take the amount borrowed and any arrangement fee added to it.
- 2Divide the APR by 12 for a monthly rate.
- 3Multiply the term in years by 12 for the number of payments.
- 4Apply the amortisation formula and multiply out to see the total interest paid.
What trips people up
- • Advertised APRs are 'representative' — only a share of applicants get them.
- • Extending the term to lower a payment can double total interest.
Common questions
Is it worth overpaying a loan?
Usually yes if the rate is above your savings rate and there is no early-repayment penalty.
Does APR include fees?
It should — that is the point of APR compared with a headline interest rate.
Skip the maths
Personal loan, HP/PCP, credit card payoff and max borrowing from income.
Open the personal / car / credit card tool