How Bounce Back Loan interest works
Bounce Back Loans have a fixed interest rate of 2.5% a year. The government paid the interest for the first 12 months, and repayments then run over the rest of the term.
Interest is worked out each month on the balance you still owe, at one twelfth of the annual rate. Early payments are mostly interest; as the balance falls, more of each payment repays the loan.
Worked example
A £30,000 loan repaid over 60 months at 2.5% costs £1,945.25 in interest. Extending the repayments to 108 months under Pay As You Grow lowers the payment to £310.49 but raises the interest to £3,532.56.
Paying less interest
Paying the loan off early saves interest. Check with your lender how early repayment works under your agreement.
Inputs for the bounce back loan interest calculator
Amount to borrow
Your Bounce Back Loan amount or remaining balance.
Interest rate (per year)
Bounce Back Loans have a fixed rate of 2.5% a year.
Term
How many months you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Bounce back loan interest calculator questions
What interest rate do Bounce Back Loans charge?
A fixed 2.5% a year.
Did I pay interest in the first year?
No. The government paid the interest for the first 12 months.
Does extending under Pay As You Grow cost more?
Yes. Repaying over longer means paying more interest overall, as the example shows.
Can I repay early to save interest?
Check with your lender how early repayment works for your loan.