Loan Repayment

You might be considering taking out a loan, either to repay an overdraft or credit card debt, to make a large purchase like a new car or home extension, or just to cover some urgent payments. There are a variety of different loans available from different lenders, over different repayment terms and with different interest rates. Use our loan repayment tool to see how much it will cost you to borrow money as interest rates and loan periods change:

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How the loan repayment is calculated

The loan repayment tool works out the monthly repayments and the total amount repayable with the information that you provide. Enter the loan amount that you are considering borrowing, and modify the interest rate and repayment term (in months) to match your loan options.

Most loans charge interest on the outstanding amount, meaning that the interest charged decreases over time as you pay the loan off. However, the monthly payment you make remains the same for the period of the loan - at the start of the loan, most of your payment is just covering the interest but by the end your payments are doing much more to repay the outstanding balance. The tool calculates interest monthly - some lenders might charge interest on a daily basis, which might affect the repayments made.

Types of loan

When considering borrowing money, there are lots of different ways to do it - from credit cards to loans to mortgages. Credit cards offer the most flexibility in terms of amount borrowed and the time taken to repay - but often they have very high interest rates. Lenders offer more structured loans which generally have a fixed payment each month - the interest rate often depends on how much you want to borrow, with better rates if you borrow more. Unusually, this can sometimes mean that it will cost you less to borrow more than to borrow less.

Most personal loans are un-secured, which means that the lender does not require you to put up any collateral for the loan. This is beneficial for you, as the risk of losing your home or other possessions if you fail to keep up the loan repayments. Secured loans, on the other hand, will require you to secure the loan with something valuable, most often your house or car. If you fail to keep up repayments on the loan, the lender is likely to reposess your house. Most loans over about £25,000 will require you to provide security in this fashion - think carefully whether you should run this risk before going ahead!

If you are considering getting a debt consolidation loan, try our debt consolidation tool. To learn more about different types of loans, the best currently available and the pitfalls to avoid, check out this excellent article from Money Saving Expert.


The information and calculators / tools on this website are for illustrative purposes only. No guarantee is given or implied for the accuracy of information provided or of the calculations performed. Some lenders may charge additional fees for taking out loans or on completion of the loan term - these are not included in any of the LoanTutor tools.

Consult a qualified professional financial advisor before making any financial decisions.