How personal loan interest works
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.
The rate you're offered depends on your credit history and the amount you borrow. Representative APRs only have to be given to at least 51% of successful applicants, so use the rate from your own quote.
Worked example
Borrowing £7,500 at 7% over 4 years costs £1,120.65 in interest. At 12%, the same loan would cost £1,980.18 in interest, £859.53 more.
Ways to pay less interest
Check your likely rate with soft-search eligibility checkers, borrow only what you need and pick the shortest term you can afford.
Inputs for the personal loan interest 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.
Term
How many years you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Personal loan interest calculator questions
How much interest is on a £7,500 loan?
At 7% over 4 years, £1,120.65. Enter your own figures above.
Why was I offered a higher rate than advertised?
Advertised representative rates only have to be offered to at least 51% of successful applicants. Your rate depends on your credit history.
Why do I pay more interest at the start?
Interest is charged on the balance you owe, which is highest at the start. As you repay, the balance falls and so does the interest.
What's the difference between the interest rate and the APR?
The interest rate is what's charged on the balance. The APR also includes most compulsory fees, so it's better for comparing the overall cost of different loans.