How flat rates work
A flat rate charges interest on the original amount for the whole term, even as you repay. Because you owe less over time, the true rate on the money you actually still owe is much higher, roughly double for typical terms.
Total interest = amount × flat rate × years. Add it to the amount and divide by the number of months to get the monthly payment.
Worked example
£10,000 at a 5% flat rate over 5 years costs £2,500 in interest, so you repay £12,500 at £208.33 a month. The equivalent APR is about 9.5%.
Why it matters
UK lenders must show the APR in consumer credit adverts and quotes, so compare APRs rather than flat rates.
Inputs for the loan calculator flat rate
Amount borrowed
The amount of the loan.
Flat interest rate (per year)
The flat rate you've been quoted, charged on the original amount for the whole term.
Term
How many years the loan lasts.
CALCULATOR QUESTIONS
Flat rate loan calculator questions
What is a flat interest rate?
Interest charged on the original amount for the whole term, even as you repay.
Is a flat rate the same as APR?
No. The APR is much higher, roughly double for typical terms.
How do I calculate flat-rate interest?
Amount × flat rate × years. For £10,000 at 5% over 5 years, £2,500.
Which should I compare?
The APR.