How the interest is worked out
UK lenders quote the APR as an effective annual rate (FCA CONC App 1.2). The calculator finds the matching monthly rate, (1 + APR)^(1/12) − 1, and sets an equal monthly repayment that pays the loan off by the end of the term. Total interest is all the repayments added up, minus the amount borrowed.
Each month's interest is charged on the balance left, so early repayments are mostly interest and later ones mostly repay the loan. That's why the first year costs more interest than an average year.
Worked example
Borrowing £10,000 at 7% APR over 5 years costs £197.00 a month. You repay £11,819.94 in total, so the interest is £1,819.94, or 18.2% of the amount borrowed. £625.08 of it is paid in the first 12 months.
How to pay less interest
A shorter term means higher repayments but less interest, because you owe money for less time. A lower APR cuts interest across the whole loan. Paying extra or settling early also saves interest, and UK law gives you the right to do both.
To see what paying extra saves, use the UK loan overpayment calculator.
What this calculator assumes
The APR is fixed and you make equal monthly repayments for the whole term. The APR includes any compulsory fees, so if your lender adds an arrangement fee the interest here includes its cost. A lender charging interest daily can differ by a few pence.
Borrowing in the US?
The country choices above the inputs open separate local pages. US lenders quote a nominal note rate divided by 12, and fees appear separately in the APR and finance charge. Choosing United States opens that page and resets the inputs; amounts are not converted.
For a loan from a US lender, use the US loan cost calculator in US dollars.
Inputs for the UK loan interest calculator
Amount to borrow
How much you're borrowing in pounds.
APR
The APR on your quote or agreement. The rate shown is only an example; your own APR depends on your circumstances.
Term
How many years you'll repay over. Part-years are fine if they come to whole months, such as 2.5 years for 30 repayments.
CALCULATOR QUESTIONS
UK loan interest calculator questions
How do I calculate the interest on a loan?
Work out the monthly repayment from the amount, rate and term, multiply it by the number of repayments, then take off the amount borrowed. What's left is the total interest.
Why is the interest higher in the first year?
Interest is charged on what you still owe, and you owe the most at the start, so early repayments are mostly interest.
Is the APR the same as the interest rate?
Not always. The APR includes compulsory fees as well as interest, so it's the fairest way to compare UK loans.
Does a longer loan mean more interest?
Yes. Repayments are lower, but you pay interest for longer, so the total cost rises.