Loan APR and true cost calculator
Not a lender · illustrative only.Figures are examples, not offers or advice.
See how an upfront arrangement fee raises the effective yearly cost versus the headline interest rate — useful when comparing offers.
Methodology: how this is calculated · Last checked:
Your inputs
Results
Monthly payment
£243.66
Cash you receive
£9,701
Headline rate
7.90%
Effective APR (illustrative)
9.49%
APR uplift from fees
1.59%
Fee as % of loan
2.99%
Total repayable (payments only)
£11,696
Method: Capital-and-interest reducing balance; monthly rate = APR ÷ 12. Representative APR on UK credit ads may include fees — we model fees separately unless stated. Effective APR treats the fee as reducing cash received while payments amortise the full principal.
Most people next
Illustrative only — not personalised advice, not a credit offer, and not an FCA-regulated recommendation. LoanCalc Lab is not a lender or broker. Check the lender’s pre-contract information for the APR, fees and early settlement terms. Rates and fees change. Full calculator disclaimer.
How this is calculated
Step by step, exactly as the calculator above works it out. Nothing is sent to a server — the sums run in your browser.
- The monthly payment is the standard reducing-balance payment on the full loan amount at the headline rate over the term (rounded to whole months).
- Cash received = loan amount − upfront fee. The fee is treated as taken from the advance.
- The page then searches for the monthly rate m at which the present value of all the payments equals the cash received, using Newton–Raphson iteration (up to 40 steps, starting from the headline monthly rate).
- Effective rate = m × 12 × 100. This is a nominal annual figure, not the compounded statutory APR defined in FCA CONC App 1, so a lender’s APR on the same loan will be a little higher.
- Uplift = effective rate − headline rate. Total repayable = monthly payment × number of months. Fee as % of loan = fee ÷ loan amount × 100.
Equations & assumptions
Cash received = principal − upfront fee. Find monthly rate m such that the present value of the payment stream equals cash received; effective APR ≈ m × 12 × 100.
- Capital-and-interest reducing balance; monthly rate = APR ÷ 12. Representative APR on UK credit ads may include fees — we model fees separately unless stated.
- Single upfront / arrangement fee only; ongoing fees not modelled.
- Fee paid separately (not added to principal) unless you change the loan amount.
Using this calculator well
When to use it
Reach for this one when two loans look similar on rate but one carries an arrangement or broker fee. It converts the fee into an effective annual rate on the cash you actually receive, so a fee-free loan at a higher headline rate can be compared fairly with a cheaper-looking loan that takes a cut up front. It is most useful on shorter terms, where a fixed fee is spread over fewer payments and so weighs more heavily.
Common errors to avoid
- Entering a fee that is added to the loan as if it were taken from the advance. The two cases change the cash you receive differently.
- Comparing the effective rate here with a representative APR from an advert: only the rate you are personally offered is a fair match.
- Leaving out small charges such as a payment-protection add-on that you would actually take.
- Assuming a fee is refunded if you settle early; usually it is not.
UK traps and limits to check
- APR vs rate vs effective rate. UK lenders must show an APR worked out under CONC App 1, which compounds monthly. On the default EXAMPLE the calculator’s 9.49% nominal figure is about 9.91% when compounded the same way. Use this page to compare offers like for like, and the lender’s APR for the legal figure.
- Arrangement fees. A fee taken from the advance means you receive less cash but repay the full amount. Compare offers on APR and on total repayable, not just the interest rate — MoneyHelper makes the same point in its personal loans guide.
- Credit score. Eligibility checkers use a soft search that other lenders cannot see; a full application leaves a hard search on your credit file. Several hard searches close together can make the next lender more cautious. See MoneyHelper on hard and soft credit checks. The rate you are finally offered may not be the advertised representative APR, which only 51% of accepted applicants must receive.
- Early settlement fees. On most regulated UK personal loans you can repay part or all of the loan early (Consumer Credit Act 1974, s94). On a fixed-rate loan the lender may charge compensation, capped at 1% of the amount repaid early (0.5% if 12 months or less remain), and generally only where early repayments exceed £8,000 in a 12-month period. The rebate rules sit in the Consumer Credit (Early Settlement) Regulations 2004; MoneyHelper explains them in plain English in repaying a personal loan early. Ask the lender for a settlement figure rather than relying on any schedule.
- Variable vs fixed. These calculators hold the rate constant for the whole term, which matches a fixed-rate loan. Some loans and most credit cards are variable, so the real figure can move — for example when the Bank of England Bank Rate changes and a lender passes it on. Re-run the numbers with a higher rate to see how much headroom you have.
General information only, not advice. LoanCalc Lab is not a lender or broker and does not recommend borrowing.
Notes & FAQs
How do I map two loan offers onto this page?
Enter each offer’s principal, headline schedule rate, term and upfront fee separately (one run per offer). EXAMPLE Loan B (£12,000 · 16.9% · 60 months · £195 fee) shows how a fee lifts illustrative effective cost above the headline rate.
What is the fee trap this tool highlights?
The contractual payment often amortises the full principal even when the fee is taken from the advance. Cash received falls, so illustrative effective APR rises while the payment line may barely move.
What is this effective rate not?
Not the statutory APR on a UK credit agreement, not a comparison rate under every overseas rulebook, and not a broker quote. It is an illustrative effective cost for comparing fee-heavy personal-loan shapes.
When should I not use the true-cost calculator?
Do not treat it as the regulated APR disclosure, and do not use it for mortgages, revolving credit cards, or products where fees are charged differently from an upfront advance deduction.
Is this the same as a regulated APR?
No. It is an illustrative effective rate that treats the fee as reducing cash received while payments amortise the full principal. Local APR rules (UK, AU comparison rate, etc.) can differ — always read the lender disclosure.
Does the arrangement fee change the result?
Yes. Raising the upfront fee lowers cash received and increases the illustrative effective APR, even when the headline rate and contractual payment stay the same.
Why might a slightly higher headline rate with £0 fee win?
Because cash received stays whole. A “cheaper” headline rate with a large fee can produce a higher illustrative effective cost once you count money in hand.
Does country mode change APR rules?
No. Labels may change; the illustrative method here stays the same. Always prefer the lender’s own regulated disclosure for the jurisdiction of the offer.
Why does the same fee matter more on a short loan?
The fee is spread over fewer payments. EXAMPLE: £10,000 at 7.9% with a £299 fee is about 9.49% effective over 48 months but about 10.93% over 24 months.
What if the fee is added to the loan instead of deducted?
This page assumes the fee comes off the cash you receive. If the lender adds it to the balance, enter the larger balance as the loan amount and a £0 fee to see the payment, and compare total repayable against the cash you need.
Related tools & guides
Who the true-cost calculator is for
Use it when two personal-loan offers differ by rate and fee. This is an illustrative effective cost, not the statutory APR on a UK credit agreement. Copy the schedule rate, not the representative APR from the advert.
EXAMPLE Loan B: £12,000 · 16.9% · 60 months · £195 fee. Monthly about £297.59; net proceeds £11,805 if the fee comes off the advance. A slightly higher rate with no fee can cost less cash on a short term. See representative APR and fees and APR. Disclaimer.
Case study: Loan B, fee or no fee
A borrower compares two illustrations for £12,000 over 60 months. Offer one is EXAMPLE Loan B: 16.9% with a £195 fee taken from the advance. The calculator shows £297.59 a month and £17,855 repaid, but only £11,805 arrives in the account. Measured on that cash, the effective rate is about 17.66% — 0.76 points above the headline.
Offer two is 17.4% with no fee: £300.82 a month, £18,049 repaid, the full £12,000 received, and an effective rate of 17.40%. The fee-free offer has the higher headline rate but the lower effective cost per pound received. On this page’s default (£10,000 at 7.9% over 48 months with a £299 fee) the effective rate is about 9.49%, against 8.90% for a fee-free 8.9% loan. Shorter terms make fees bite harder. The lender’s own APR, which compounds, will read slightly higher than these nominal figures.
Edge cases
A fee equal to or above the loan amount, a negative fee or a rate outside 0–50% shows a message. A £0 fee returns the headline rate unchanged. Fees added to the balance instead of deducted are not modelled here.
Sources for product-norm wording only: MoneyHelper — credit; FCA consumer credit. Case-study figures are EXAMPLES produced by this calculator’s own code, not a quote or an offer. Last checked 24 October 2026.