Loan Calculator
Use this free loan calculator to instantly estimate your monthly repayments, total interest paid, and overall loan cost. Whether you’re planning a personal loan, car loan, or student loan, this tool gives you a clear picture of what borrowing will actually cost you — before you sign anything.
🏦 Loan Calculator
How to Use the Loan Calculator
- Enter the loan amount you wish to borrow
- Enter the annual interest rate (%)
- Enter the loan term in months or years
- Click Calculate to see your monthly payment, total interest, and total repayment amount
What Is a Loan Calculator?
A loan calculator is a financial tool that estimates how much you will pay each month on a loan, based on the amount borrowed, the interest rate, and the length of the repayment period. It helps you understand the true cost of borrowing and compare loan options before committing — potentially saving you hundreds or thousands in unnecessary interest.
Loan Payment Formula
Monthly loan payments are calculated using the standard amortisation formula:
Monthly Payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
- P = Principal loan amount
- r = Monthly interest rate (annual rate ÷ 12)
- n = Total number of monthly payments
Loan Repayment Examples
| Loan Amount | Interest Rate | Term | Monthly Payment | Total Interest | Total Repayment |
|---|---|---|---|---|---|
| £5,000 | 6% | 3 years | £152 | £472 | £5,472 |
| £10,000 | 5% | 5 years | £189 | £1,323 | £11,323 |
| £20,000 | 4% | 7 years | £274 | £2,982 | £22,982 |
| £50,000 | 3.5% | 10 years | £494 | £9,296 | £59,296 |
How Loan Repayments Work
Each monthly payment is split into two parts: principal and interest. In the early months of a loan, most of your payment goes towards interest. As the balance decreases, more of each payment goes towards paying off the principal. This is called amortisation.
For example, on a £10,000 loan at 5% over 5 years, your first payment of £189 might include £42 in interest and £147 off the principal. By the final payment, almost the entire amount goes to principal — and your balance reaches zero.
How Interest Rate Affects Your Repayments
Even small differences in interest rate have a big impact on total cost. Here’s how the same £10,000 loan over 5 years changes with different rates:
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 3% | £180 | £788 |
| 5% | £189 | £1,323 |
| 8% | £203 | £2,166 |
| 12% | £222 | £3,347 |
How to Reduce Your Loan Cost
- Borrow less: Only borrow what you need — even a small reduction saves significant interest over the loan term
- Shorter term: A shorter repayment period means less total interest, even though monthly payments are higher
- Lower interest rate: Shop around and compare rates — even a 1% difference on a £10,000 loan saves over £500
- Overpayments: Paying more than the minimum each month reduces your balance faster and cuts total interest
- Good credit score: Lenders offer better rates to borrowers with strong credit histories — check your score before applying
Types of Loans This Calculator Covers
- Personal loans — for home improvements, holidays, weddings, or debt consolidation
- Car loans — for financing a vehicle purchase
- Student loans — to estimate repayments on private student finance
- Business loans — for equipment, expansion, or working capital
- Debt consolidation loans — to combine multiple debts into one manageable monthly payment
Loan Calculator FAQ
How is a monthly loan payment calculated?
Your monthly payment is calculated using the loan amount, the monthly interest rate (annual rate divided by 12), and the total number of payments. The amortisation formula spreads your repayment evenly across the loan term so each payment is the same amount.
Does the loan calculator include interest?
Yes — the monthly payment figure includes both principal and interest. The calculator also shows the total interest you will pay over the full loan term, so you can see the true cost of borrowing.
What is the difference between APR and interest rate?
The interest rate is the annual cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus any additional fees or charges, giving a more complete picture of the loan’s true cost. Use our APR calculator to compare loans on a like-for-like basis.
Can I use this for a mortgage?
This calculator works for any fixed-rate loan. For a dedicated mortgage tool with property price, deposit, and term options, use our mortgage calculator.
What happens if I miss a loan payment?
Missing a loan payment can result in late fees, damage to your credit score, and in some cases, default proceedings. If you’re struggling, contact your lender immediately — most offer payment holidays or restructuring options before resorting to penalties.
Related Calculators
- Mortgage Calculator — Calculate monthly mortgage payments and total interest
- APR Calculator — Compare the true cost of loans using Annual Percentage Rate
- Interest Calculator — Calculate simple interest on any loan or savings
- Compound Interest Calculator — See how investments grow with compound interest
- Savings Calculator — Plan your savings goals and see future balances