Loan Calculator UK, GBP APR, PCP vs HP and Mortgage

This loan calculator helps you estimate your monthly payment in pounds for a personal loan, car finance, or mortgage. It shows the monthly amount, the total interest, and a full schedule, all on a reducing balance basis, which is how UK lenders work. In the UK, loans are compared using the APR, and lending is regulated by the Financial Conduct Authority (FCA), so this page explains the terms you will actually see. It is part of our loan calculators by country.

How to use the UK loan calculator

The currency is set to GBP. You can switch it if you need another currency.
Enter the loan amount in pounds.
Enter the rate or APR the lender quoted and the term in years.
Read your results: the monthly payment, the total interest, and a year by year schedule.

How loan repayments work in the UK

UK loans use a reducing balance, where interest each month is charged on the balance you still owe, so it falls as you repay. The monthly payment uses the standard formula:

Payment = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)

Here P is the loan amount, r is the monthly rate, and n is the number of months.

Worked example: Borrow GBP 15,000 at a 7% APR for 5 years. The monthly payment is about GBP 297, and the total interest is about GBP 2,821. Use the APR you are actually offered, since the advertised rate is not guaranteed to everyone.

Representative APR explained

This is the most important thing to understand in the UK. When a lender advertises a loan, it shows a representative APR. By law, only at least 51% of accepted customers need to get that rate, so you might be offered a higher APR depending on your credit. The APR also includes compulsory fees, not just interest, which makes it the fairest single number to compare loans. So treat the advertised rate as a guide, and always check the personal APR you are actually offered before you commit.

Mortgages in the UK

UK mortgages have a few features worth knowing:

Fixed then variable. Many mortgages are fixed for an initial period, often 2 or 5 years, then move to the lender’s higher standard variable rate (SVR), so your payment can jump unless you remortgage.
Tracker rates follow the Bank of England base rate plus a margin, so they rise and fall with it.
Repayment vs interest only. A repayment mortgage clears the loan by the end, while an interest only mortgage keeps the balance and needs a separate plan to repay it.
LTV and ERCs. A bigger deposit, meaning a lower loan to value, usually earns a better rate, and leaving a fixed deal early can trigger an early repayment charge.

This calculator models a repayment mortgage at a single rate, so for a fixed then variable deal, run it again at the higher revert rate to see the worst case.

Car finance: PCP vs HP

Most UK car finance is one of two types:

Hire Purchase (HP): you pay the full price plus interest over the term, then own the car at the end.
Personal Contract Purchase (PCP): lower monthly payments because you only pay off part of the value, then choose whether to pay a large optional final payment, the balloon, to keep the car. PCP usually has mileage limits.

PCP looks cheaper each month, but you do not own the car unless you make the final payment, so compare the total cost, not just the monthly figure.

Fixed vs variable rates

Personal loans and car finance are usually at a fixed rate for the term, so the payment does not change. Mortgages and some other borrowing can be variable, often linked to the Bank of England base rate, so the payment can rise or fall. If your rate is variable, run this calculator at a higher rate to see how a base rate rise would feel.

Paying off early in the UK

For most regulated personal loans you can settle early and receive a rebate on some of the interest, though a small charge may apply. Mortgages can carry an early repayment charge during a fixed deal. Either way, on a reducing balance loan, paying early saves interest, so check your agreement and see the saving with our loan prepayment calculator.

Tips for borrowers in the UK

Compare by APR, which includes fees, not by a headline monthly figure.
Remember the advertised APR is representative, so check your personal offer.
Check your credit file before applying, since it affects the rate you get.
For a car, compare PCP and HP on total cost, not just the monthly payment.
For a mortgage, plan for the revert rate when a fixed deal ends.

Related tools and other countries

Plan a specific loan with our car loan, personal loan, or mortgage calculators, or build a full amortization schedule. Borrowing elsewhere? Try:

India (INR) · Pakistan (PKR) · UAE (AED) · Saudi Arabia (SAR) · Nigeria (NGN) · All countries

FAQ – Loan Calculator UK

Frequently asked questions

How is a loan repayment calculated in the UK?

UK loans use a reducing balance. The payment is P × 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. Loans are compared using the APR, which includes fees.

What is representative APR?

It is the advertised APR that at least 51% of accepted customers receive. You might be offered a higher rate depending on your credit, so the advertised figure is a guide, and you should check your personal APR before you commit.

What is the difference between PCP and HP car finance?

With Hire Purchase you pay the full price plus interest and own the car at the end. With PCP the monthly payments are lower because you pay off only part of the value, then choose whether to make a large final payment to keep the car. PCP usually has mileage limits.

Are UK mortgage rates fixed or variable?

Many are fixed for an initial period, often 2 or 5 years, then move to the lender's higher standard variable rate unless you remortgage. Tracker mortgages follow the Bank of England base rate, so they change when it does.

Can I repay my loan early in the UK?

Usually yes. For most regulated personal loans you get a rebate on some interest, though a small charge may apply. Mortgages can have an early repayment charge during a fixed deal. On a reducing balance, paying early saves interest.

Does my credit score affect my rate?

Yes. Your credit file affects whether you are accepted and the APR you are offered. A stronger file usually means a lower rate, so it helps to check and improve it before applying.

Built and maintained by Hira Fatima, BSc in Computer Science (BSCS)

Hira builds, tests, and maintains the calculators on loancalc.io and writes the guides that go with them.
How we calculate: Reducing balance uses the standard EMI formula; flat rate charges interest on the full original amount. | Last updated: June 2026

Disclaimer: This calculator gives estimates for planning only and is not financial advice. Your actual figures may differ due to fees, taxes, and lender policies. Confirm with your bank or lender before you borrow.