1. What is the Unsecured Personal Loan Calculator?

This calculator determines monthly payments for unsecured personal loans in the UK, which typically have higher interest rates than secured loans. It helps borrowers understand their repayment obligations before committing to a loan.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Principal loan amount (GBP)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments
• \( PMT \) — Monthly payment amount (GBP)

Explanation: The formula accounts for compound interest over the loan term, spreading repayments equally across all months.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps budget effectively and compare different loan offers. Unsecured loans typically have higher rates (7-30% APR) than secured loans.

4. Using the Calculator

Tips: Enter the loan amount in GBP, annual interest rate (not APR), and loan term in months. For UK personal loans, terms typically range 12-84 months.

5. Frequently Asked Questions (FAQ)

Q1: Why are unsecured loan rates higher?
A: Lenders charge more for unsecured loans as they have no collateral to recover if you default.

Q2: What's typical for UK personal loans?
A: Amounts £1,000-£25,000, terms 1-7 years, rates 7-30% APR depending on creditworthiness.

Q3: Does this include fees?
A: No, this calculates principal+interest only. UK lenders may charge arrangement fees (typically 1-5% of loan amount).

Q4: How can I reduce my payments?
A: Choose a longer term (more months) or improve your credit score to qualify for lower rates.

Q5: Are early repayments allowed?
A: Most UK lenders allow early repayment but may charge 1-2 months' interest as a fee.