Loan Repayment Calculator

Understanding how your loan repayments break down between principal and interest is one of the most important steps in managing your borrowing. An amortisation schedule shows you exactly where your money goes each month, revealing how the split between interest and principal changes over the life of the loan. In the early months of a standard repayment loan, a large proportion of each payment covers interest charges. As the outstanding balance decreases, less interest accrues each month and more of your payment goes toward reducing the principal. This front-loading of interest is why making extra payments early in the loan term has the greatest impact on reducing your total cost of borrowing. The loan repayment calculator generates a complete month-by-month amortisation schedule and lets you see the effect of making extra monthly payments. Even modest overpayments can significantly reduce both the total interest paid and the number of months needed to clear the debt. For example, adding just GBP 50 per month to a GBP 15,000 loan at 9% could save you hundreds in interest and shorten the term by several months. UK consumer credit regulations give borrowers the right to make early repayments on personal loans, though lenders may charge a compensation fee of up to 58 days of interest. Before committing to a repayment strategy, check your loan agreement for any early repayment charges. For most borrowers, the interest savings from extra payments far outweigh any fees charged.

How to Use This Calculator

To calculate your loan repayment schedule: 1. Enter the total loan amount. This is the original amount borrowed, or the current outstanding balance if you want to model the remaining term. 2. Enter the annual interest rate as a percentage. Use the APR from your loan agreement for the most accurate results. 3. Set the loan term in months. This is the original or remaining term agreed with your lender. 4. Optionally, enter an extra monthly payment amount. This shows you how overpaying each month reduces your total interest and shortens the payoff time. Leave this at zero to see the standard repayment schedule. 5. Review the results. The calculator shows your standard monthly payment, total interest, and (if you entered extra payments) the interest saved and months saved. The chart displays your balance declining over time, with a second line showing the faster decline with extra payments.

How It Works

The loan repayment calculator uses a month-by-month amortisation model. First, it calculates the standard monthly payment using the annuity formula: Payment = P x r(1+r)^n / ((1+r)^n - 1), where P is the loan amount, r is the monthly rate, and n is the number of months. Each month, interest is calculated on the remaining balance: Interest = Balance x Monthly Rate. The principal repaid is the payment minus the interest: Principal = Payment - Interest. The new balance is then: New Balance = Old Balance - Principal. When extra payments are made, the total monthly payment increases. The extra amount goes entirely toward reducing the principal, which means less interest accrues in future months. The calculator runs both scenarios (standard and with extra payments) to show the difference in total interest and payoff time. For a GBP 15,000 loan at 9% over 48 months, the standard monthly payment is approximately GBP 373. In month 1, interest is GBP 15,000 x (9/12/100) = GBP 112.50, and principal repaid is GBP 373 - GBP 112.50 = GBP 260.50. By month 48, almost all of the payment goes toward principal.

Worked Examples

Making extra payments is one of the most effective ways to reduce the cost of borrowing, but it is important to approach this strategically. Before increasing loan payments, ensure you have an emergency fund covering 3-6 months of essential expenses. Unexpected costs such as car repairs or boiler replacements should not force you into more expensive borrowing. If you have multiple debts, consider the "avalanche" method (paying extra on the highest-interest debt first) or the "snowball" method (paying off the smallest balance first for psychological momentum). Free debt advice is available from StepChange, Citizens Advice, and the National Debtline. When modelling extra payments, be aware that some lenders apply overpayments differently. Some reduce your monthly payment while keeping the term the same, others keep the payment the same and shorten the term, and some let you choose. The interest savings shown in this calculator assume the extra payment reduces the balance each month while keeping the standard payment amount unchanged.