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Loan repayment calculator

Loan repayment calculator

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Last updated: 24 May 2021

Using a loan calculator is an effective way to ensure, before you apply, that you can afford to pay back a loan, in turn protecting your credit score and avoiding falling into debt. 

What is a loan repayment calculator?

When looking for cheap loans, it’s not always clear exactly what the final cost will be. That’s because loan costs depend on the rate of interest as well as the term. Even if one of these variables is low, that doesn’t necessarily mean your loan will be cheap.

A loan repayment calculator allows you to work out exactly how much you’ll repay, making it easier to know if a deal is good value when you compare loans.

However, the calculator works on the premise that you don’t miss any repayments or make any over or underpayments; it also assumes you have a constant, rather than variable, rate of interest.

Should I use a personal loan calculator?

Personal loans, also known as unsecured loans, usually come with a fixed rate of interest for the loan term. You’ll have a set repayment plan so you know exactly how much you need to repay each month.

However, missing a payment not only prolongs your loan term and increases the cost of your loan overall, but in most cases also carries a penalty fee. Moreover, doing so will negatively affect your credit score.

Therefore, using a personal loan calculator before you apply allows you to see exactly what your monthly repayments would be, so you can choose a loan you can afford. 

How much will my loan cost?

Your loan cost is usually based on three factors:

  • The sum you want to borrow
  • The loan term
  • The rate of interest

How to use our calculator

Our free-to-use loan calculator is a simple way to ascertain what your loan will cost.

First, let us know how much you want to borrow. Next, choose how long you’d like to repay your loan for – remember, the longer the term the higher the cost overall, but generally monthly repayments are more affordable. Last, select the interest rate which will also determine your monthly repayments.

You can use our calculator to check what you can afford. A particular loan deal may have additional costs but as a general rule of thumb, the best loans strike a balance between low interest rates and shorter terms.

Extra loan costs

In addition to your loan cost, there are often hidden charges associated with borrowing money this way.

You might be charged a loan arrangement fee. Not all lenders do, so be sure you look out for hidden administrative costs when you compare loans.

As mentioned, missing a repayment increases your loan cost overall and usually carries penalty fees. Be sure to check what these might be.

Last – and this may surprise you – you can be charged for wanting to pay back your loan early. Companies loan money on the agreement they’ll make profit from interest charged over a set term, so some lenders may not even allow early repayment.

What these additional charges are should be specifically outlined in a deal’s terms and conditions, so be sure to always check these when you run a loan comparison.  

Types of loan

There are a few different types of loan available, so it’s important to choose the right one for your circumstances and needs.

Unsecured loans or personal loans

These loans typically allow you to borrow between £1,000 and £25,000 with a repayment term of 1-10 years. Repayments are fixed and the loan isn’t secured against an asset, so they’re widely accessible, although this means interest rates are generally much higher than with other forms of borrowing.

Secured loans

By contrast, secured loans are ones which are secured against a high-value asset, typically a home. Thus, they’re often known as ‘homeowner loans’. They allow you to borrow upward of £25,000 and terms can be as long as 35 years.

Critically, secured loans come with the risk that if you fail to keep up with your repayments, your home or asset could be repossessed – it’s used as collateral. Interest rates are often lower than those for unsecured loans, but deals can have a variable rate, making it harder to budget.

How to compare loans

Run a loan comparison with us to see what deals are available. We’ll show you loans from a huge range of lenders so you can see, clear as day, which ones are the best value.

However, a strong word of caution: advertised rates of interest only have to be offered to 51% of applicants, typically those with the best credit scores. That means that in half of cases those applying don’t secure those competitive rates. That’s why it’s important to get your credit score in check before you apply for a loan, and always read the terms and conditions before you decide on a deal.


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Michael Quinn

Author: Michael Quinn

Michael is a dedicated author helping usave to write guides, blogs and news for the last four years. When not writing articles, you can usually find him at wine tasting events or having a political debate on the night tube.

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