How personal loan repayments work
A personal loan is usually unsecured, meaning it isn't tied to your home or car. You borrow a fixed amount and repay it in equal monthly payments over a fixed term, often between 1 and 7 years.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Worked example
Borrowing £7,500 at 7% over 4 years costs £179.60 a month, £8,620.65 in total. Over 3 years the payment rises to £231.58 but the total falls to £8,336.82. Over 5 years it's £148.51 a month and £8,910.54 in total.
Getting the best rate
The rate you're offered depends on your credit history and the amount you borrow. Many lenders let you check your likely rate with a soft search, which doesn't affect your credit score.
Advertised representative APRs only have to be offered to at least 51% of successful applicants, so use the rate from your own quote.
Inputs for the personal loan calculator
Amount to borrow
The amount you want to borrow.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote. Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Term
How many years you'll repay the loan over.
CALCULATOR QUESTIONS
Personal loan calculator questions
What will a £7,500 personal loan cost?
At 7% over 4 years it costs £179.60 a month and £1,120.65 in interest. Enter your own figures above.
Is a personal loan secured?
Usually not. Unsecured loans aren't tied to your property, though missing payments still harms your credit record.
Should I choose a shorter or longer term?
A shorter term costs more each month but less in total. Pick the shortest term with a payment you can comfortably afford.
Will checking rates affect my credit score?
Not if the lender uses a soft search. A full application uses a hard search, which appears on your credit file.