Loan Calculator
Enter how much you're borrowing, the annual interest rate, and how many years you'll take to pay it off — your monthly repayment, total interest, and a full year-by-year payoff schedule update instantly as you type.
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Monthly repayment
£193.33
Total interest paid
£1,599.68
Total amount repaid
£11,599.68
Yearly repayment schedule
| Year | Principal paid | Interest paid | Remaining balance |
|---|---|---|---|
| 1 | £1,768.03 | £551.90 | £8,231.97 |
| 2 | £1,877.08 | £442.86 | £6,354.89 |
| 3 | £1,992.85 | £327.08 | £4,362.03 |
| 4 | £2,115.77 | £204.17 | £2,246.27 |
| 5 | £2,246.27 | £73.67 | £0.00 |
How it's worked out
This uses the same "reducing balance" method almost every bank and lender uses for a standard loan or mortgage: each month's interest is charged only on what you still owe, so the interest portion shrinks and the principal portion grows with every repayment, even though the repayment itself stays the same.
Monthly repayment
With a monthly interest rate of r (the annual rate ÷ 12 ÷ 100) and n total monthly repayments (years × 12), the fixed monthly repayment is:
Repayment = Loan amount × r × (1 + r)ⁿ ÷ [(1 + r)ⁿ − 1]
If the rate is 0%, it's simply the loan amount divided by the number of repayments.
Yearly schedule
For each year, we add up 12 months of repayments: the interest portion (balance still owed × monthly rate) and the principal portion (repayment − interest) for each month, showing the running balance at the end of the year.
Worked example
Suppose you borrow £10,000 at a 6% annual interest rate over 5 years (60 monthly repayments). The monthly repayment works out to about £193.33. Over the full 5 years you'd pay about £1,599.68 in interest, for a total repayment of £11,599.68.
Interest is front-loaded: in year 1, about £551.90 of your repayments goes on interest and £1,768.03 reduces the balance. By year 5, only £73.67 is interest and £2,246.27 goes to principal — because by then the remaining balance, and so the interest charged on it, is much smaller.
Frequently asked questions
How is the monthly repayment worked out?
We use the standard reducing-balance formula that banks use for ordinary loans and mortgages: it finds the fixed monthly amount that pays off the loan amount plus interest, charged only on the balance still owed, over the number of months you enter. If the interest rate is 0%, the repayment is simply the loan amount divided by the number of months.
Why do I pay more interest in the early years than in the later years?
Interest is worked out each month on whatever balance is still outstanding. Early on, you owe almost the full loan amount, so more of each repayment goes on interest; as the balance shrinks, more of the same fixed repayment goes towards principal instead.
Does this include fees, insurance, or taxes?
No — this shows principal and interest only, at the rate you enter. Real loans often include extra fees, insurance, or arrangement costs, so check your lender's official offer for the exact amount you would pay.
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For information only. This is not financial or tax advice.