1. What Are Personal Loan Rates in the UK?

Personal loan rates in the UK typically range from 3% to 30% APR depending on your credit score, loan amount, and term length. This calculator helps you understand the total cost of borrowing.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Total amount to be repaid
• \( P \) — Principal loan amount (£)
• \( r \) — Annual interest rate (decimal)
• \( n \) — Loan term in years

Explanation: The formula calculates how much you'll repay including compound interest over the loan term.

3. Importance of Loan Rate Calculation

Details: Understanding the total cost of a loan helps you compare different offers and make informed borrowing decisions.

4. Using the Calculator

Tips: Enter the loan amount in £, annual interest rate as a percentage (e.g., 5.5 for 5.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical personal loan rate in the UK?
A: As of 2023, rates range from about 3% for excellent credit to 30% for poor credit, with most borrowers getting rates between 5-15%.

Q2: How does loan term affect the total cost?
A: Longer terms mean lower monthly payments but higher total interest paid. Shorter terms have higher payments but lower total cost.

Q3: Are UK personal loan rates fixed or variable?
A: Most personal loans in the UK offer fixed interest rates for the entire term.

Q4: What credit score is needed for the best rates?
A: Typically you need a credit score of 881-960 (Experian) to qualify for the lowest rates.

Q5: Are there fees not included in this calculation?
A: Some lenders charge arrangement fees (usually 0-2% of loan amount) which would increase the total cost.