Loan repayment calculator

At 6.9% APR over 5 years the repayment is about £197.54 a month. You repay £11,852 in total, of which £1,852 is interest. A lower rate or a shorter term brings the interest down; a longer term lowers the monthly figure but raises the total.

Yes. Interest is charged on the balance still owed, so every pound paid early stops earning interest for the lender. Adding £50 a month to the example above clears it in 3 years 11 months instead of 5 years and saves about £440. Check the agreement first: some lenders treat an overpayment as a partial early settlement and charge up to about two months' interest on the amount.

Yes. Under the Consumer Credit (Early Settlement) Regulations 2004 you can settle a regulated loan at any time. The lender can charge up to 58 days of interest on the amount repaid (28 days for loans of under a year) and must give you a settlement figure on request. For most borrowers the interest saved comfortably outweighs that charge.

The interest rate is the charge for borrowing. APR, the annual percentage rate, adds any compulsory fees and expresses the total cost as a single yearly rate, so it is the figure to compare between lenders. A "representative" APR is the rate at least 51% of accepted applicants receive; your own offer can be higher.

Cheaper each month, more expensive overall. On £10,000 at 6.9%, a 3 year term costs £308.31 a month and £1,099 in interest, while 7 years costs £150.44 a month but £2,637 in interest. Choose the shortest term whose payment you can keep up reliably.

The lender will usually charge a late payment fee, add interest on the missed amount and report the missed payment to the credit reference agencies, where it stays on your file for six years. If you expect to miss a payment, contact the lender first: they must consider a payment arrangement, and doing so before the due date protects your credit record better than a default.

The schedule table on this page groups the calculated monthly repayments into years, showing the opening balance, the amount paid, the interest charged and the closing balance for each one. Interest makes up a larger share of the payment in the early years, when the balance owed is highest, and a smaller share later on. Adding an overpayment moves more of each payment onto the balance, so the closing balance in the schedule falls faster.

The calculation charges interest each month on the balance still owed, at the APR divided by twelve, then applies the rest of the payment to reduce that balance. The monthly repayment is set at the single level amount that brings the balance to exactly zero on the final scheduled payment, using the standard amortisation formula. An overpayment is treated as going entirely to the balance, since the month's interest is already covered by the contractual payment.

Borrowing £10,000 at 6.9% APR over 5 years gives an estimated repayment of £197.54 a month, with a total repaid of £11,852, of which £1,852 is interest. Adding a £50 monthly overpayment to that example is estimated to clear the loan in 3 years 11 months instead of 5 years, saving about £440 in interest.

As an estimate built on a flat monthly APR with no arrangement fees added, so a lender's own figure can come out a little different. Only 51% of accepted applicants are guaranteed the advertised representative APR, so the rate actually offered may be higher. Early settlement charges under the 2004 regulations, of up to 58 days of interest on the amount repaid early, are not deducted from the overpayment saving shown.