What this calculator does
Takes a loan amount and up to three loan offers (APR and term for each). Returns monthly payment, total repayable, and total interest for each offer, ranked by total cost.
The formula
For each loan offer:
Monthly payment = P × r / (1 − (1 + r)^−n)
Where P = principal, r = APR/12, n = term months
Total repayable = monthly × n
Total interest = total repayable − P
Comparison:
Ranked by total interest (ascending = cheapest first)
Note: a lower monthly payment with a longer term
is not always cheaper overall
Assumptions
- APR is the representative rate. Under UK law (FCA CONC 3.5), lenders must offer the advertised APR to at least 51% of accepted applicants.
- No early repayment charges are modelled.
- No origination or arrangement fees are modelled unless they are already included in the APR.
Data sources
- FCA CONC 3.5 — Representative APR rules: the advertised APR must be the rate offered to at least 51% of customers who are accepted.
- Consumer Credit Act 1974 — Definition of APR and total charge for credit.
Limitations
- The actual rate offered by the lender may differ from the representative APR depending on the applicant's credit profile.
- Does not model early repayment charges.
- Does not compare secured loans against unsecured loans.
Worked example
Loan amount: £8,000. Three offers compared.
Offer A: 6.9% APR, 36 months r = 6.9% / 12 = 0.575% Monthly = £247 Total = £247 × 36 = £8,892 Interest = £892 Offer B: 9.9% APR, 48 months r = 9.9% / 12 = 0.825% Monthly = £202 Total = £202 × 48 = £9,696 Interest = £1,696 Offer C: 12.9% APR, 60 months r = 12.9% / 12 = 1.075% Monthly = £182 Total = £182 × 60 = £10,920 Interest = £2,920 Cheapest overall: Offer A (£892 interest) despite having the highest monthly payment
Changelog
| Date | Change |
|---|---|
| May 2026 | Initial publication |