⚡ The short version
Borrow £25,000 at 6.9% over 5 years and the payment is £493.85 a month — £29,631 in total, of which £4,631 is interest. Add £100 a month and the loan clears in about 4.1 years instead of 5, saving £924.
The calculator
How to use it
- Amount — what you are borrowing, before any fees the lender rolls in.
- Rate and term — the rate on the offer in front of you, and how long you want to be paying rather than the longest the lender allows.
- Deposit or down payment — anything you are putting in up front; the payment is calculated on the rest.
- Extra each month — try the amount you could genuinely spare. The interesting number is not the payment, it is what happens to the term.
- Schedule — the amortisation table breaks every payment into interest and principal, which is where the shock usually lives.
Worked example
Borrow £25,000 at 6.9% over 5 years (60 payments). The monthly rate is 6.9 ÷ 12, and the standard repayment formula gives £493.85 a month. Over the full term you repay £29,631 — £4,631 of it interest.
The pattern worth understanding: of the first £493.85 payment, £143.75 is interest (29%), because interest is charged on a balance that is still £25,000. Only later does the balance fall fast enough for the principal to dominate. That is why overpaying early is worth far more than overpaying late — the interest it prevents never gets charged.
Put £100 a month into the same loan and it clears in about 4.1 years instead of 5, with total interest falling to £3,707 — a saving of £924. Nothing else about the loan changed.
What this calculator does not do
- Fees. Arrangement, broker and valuation fees are not included unless you add them to the amount borrowed. Fees are why the APR you are quoted can be higher than the rate you are shown.
- Variable rates. Every number here assumes the rate stays put for the whole term. A tracker or variable loan will not.
- Early repayment charges. Many loans cap how much you can overpay each year without a penalty — check your terms before assuming the overpayment figures apply to you.
- Approval. This answers what a given loan costs. Whether you are offered it is the lender's decision.
🛠️ Related money tools
❓ Frequently asked questions
How is a monthly loan payment calculated?
Monthly payment = P × i × (1+i)^n / ((1+i)^n − 1), where P is the amount borrowed, i is the monthly interest rate (annual rate ÷ 12) and n is the number of payments. On £25,000 at 6.9% over 5 years that is £493.85 a month.
Does overpaying a loan actually save money?
Yes, and the saving comes from the term rather than the payment. Adding £100 a month to £25,000 at 6.9% clears it in about 4.1 years instead of 5 and saves roughly £924 in interest. The monthly payment itself usually stays the same.
What is the difference between the interest rate and the APR?
The rate is what you are charged on the balance. The APR also folds in most fees and the timing of payments, so it is the honest number for comparing two offers — a lower rate with a big arrangement fee can cost more than a higher rate without one.
Why is most of my early payment interest rather than debt?
Interest is charged on the balance, and early on the balance is still close to the full amount. On £25,000 at 6.9% the first month's interest is £143.75 of the £493.85 payment; by the final year almost all of it is principal. Overpaying early avoids interest that would otherwise be charged for years.
Will my bank quote the same monthly payment?
Close, but not always identical — lenders round differently, count the first payment from a different date, or charge interest daily rather than monthly. Use this for the decision and the lender's documents for the exact figure.