Loan Calculator
Calculate monthly loan payments, total interest cost, and full amortisation schedule for any loan.
What is Loan Calculator?
A loan calculator computes the monthly repayment amount, total interest paid, and full amortisation schedule for any fixed-rate loan — whether a business loan, personal loan, car finance, or any other instalment credit. The key formula is based on the time value of money: money borrowed today must be repaid with interest that compensates the lender for the risk and opportunity cost of lending. The standard loan payment formula (PMT function in spreadsheets) calculates the equal monthly payment that pays off principal and interest in full over the loan term. A full amortisation schedule breaks each payment into its principal and interest components — in early payments, most of the payment goes to interest; as the loan matures, more goes to principal. Understanding this helps with decisions about making overpayments (which reduce the principal directly and save significant interest) and comparing loans with different rates and terms.
How to Use Loan Calculator
- 1
Enter Loan Details
Input loan amount (principal), annual interest rate, and loan term in months or years. Optionally enter a start date to see the full repayment schedule with actual dates.
- 2
View Payment Summary
See your monthly payment amount, total amount repaid over the full term, total interest paid, and effective monthly interest rate.
- 3
Review Amortisation Schedule
See a month-by-month breakdown showing each payment's split between principal and interest, cumulative interest paid, and remaining loan balance after each payment.
Use Cases
Business Loan Planning
Before applying for a business loan, calculate the monthly repayment to verify it is serviceable given your cash flow. A £50,000 loan at 8% over 5 years costs £1,014/month. Ensure your monthly net income comfortably exceeds this — lenders typically require at least 1.25× debt service coverage ratio (income must be at least 25% higher than the loan payment).
Comparing Loan Offers
Two loan offers with the same £20,000 principal but different terms: Lender A offers 6% over 3 years (£608/month, £1,898 total interest). Lender B offers 5% over 5 years (£377/month, £2,646 total interest). Lender B has lower monthly payments but costs £748 more in total interest. Use the comparison tool to make this trade-off explicit before deciding.
Overpayment Strategy
Calculate the impact of overpaying your loan. Adding £100/month to a £30,000 loan at 7% over 5 years reduces the total interest from £5,641 to £4,397 — saving £1,244 and paying off the loan 8 months early. The amortisation schedule shows exactly which months fall away.
Features
Monthly Payment Calculation
Calculates the exact equal monthly payment (PMT) required to repay the principal plus interest in full over the specified term.
Full Amortisation Schedule
Month-by-month table showing payment number, date, payment amount, principal paid, interest paid, cumulative interest, and remaining balance — downloadable as CSV.
Overpayment Calculator
Shows how much interest you save and how many months earlier you pay off the loan by making additional monthly or one-time payments — quantifying the benefit of overpaying.
Loan Comparison
Compare two loan options side by side (different rates, terms, or amounts) to see total cost differences over the full loan term — making the true cost of a "lower monthly payment" visible.
Frequently Asked Questions
Monthly Payment = P × (r(1+r)^n) / ((1+r)^n - 1), where P = principal (loan amount), r = monthly interest rate (annual rate ÷ 12), n = number of monthly payments (years × 12). Example: £10,000 loan at 6% annual (0.5% monthly) over 3 years (36 months): Payment = 10,000 × (0.005 × 1.005^36) / (1.005^36 - 1) = £304.22/month. Total repaid: £10,952. Total interest: £952.
An amortisation schedule is a complete table of loan repayments showing, for each payment: the payment number and date, total payment amount, portion going to interest, portion reducing the principal, cumulative interest paid to date, and remaining loan balance. In early payments, the majority goes to interest (because interest is calculated on the full remaining balance). As principal is reduced, the interest portion shrinks and the principal portion grows — even though each payment is the same amount.
Usually yes, if your loan agreement permits overpayments without penalty (check before making any extra payments). Overpayments reduce the principal directly, which reduces the interest charged in all subsequent months. The interest saved grows exponentially — early overpayments save more than late ones because they eliminate months of compounding interest. Even small regular overpayments (an extra £50/month on a £20,000 loan at 7%) can save hundreds of pounds and months off the loan term. Compare this saving against alternative uses for the money (investing, paying off higher-rate debt first).
APR (Annual Percentage Rate) includes both the nominal interest rate and all mandatory fees (arrangement fees, admin fees, insurance where required) expressed as a single annual percentage. It represents the true total cost of borrowing. The quoted interest rate only reflects the interest charged on the outstanding balance. Example: a loan with 5% interest but a 2% arrangement fee has an APR higher than 5% — the fee makes the true annual cost more than the headline rate. Always compare APRs, not just interest rates, when choosing between loan products.
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