£10,000 Personal Loan over 3 years: what it costs each month
What a £10,000 personal loan over 3 years costs at different rates
The rate you are offered depends on your credit score, your income and how much you borrow. The same £10,000 over 3 years can cost very different amounts, so it is worth seeing the whole range before you apply.
Moving the rate by one percentage point, from 9.9% to 10.9%, changes the monthly payment by about £4.29 and the total interest by about £154.
£10,000 over 3 years by interest rate
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 5.9% | £303.07 | £911 | £10,911 |
| 7.9% | £311.65 | £1,219 | £11,219 |
| 9.9% | £320.22 | £1,528 | £11,528 |
| 14.9% | £341.63 | £2,299 | £12,299 |
| 19.9% | £362.96 | £3,067 | £13,067 |
| 24.9% | £384.19 | £3,831 | £13,831 |
Fixed rate, equal monthly payments, no fees.
The formula behind the payment
The payment on a fixed-rate loan is: amount × monthly rate ÷ (1 − (1 + monthly rate)−months). For £10,000 over 36 months at 9.9% APR the monthly rate is 0.7898%, which gives £320.22. Multiplying by 36 months gives £11,528 repaid in total, so the cost of borrowing is £1,528.
Should you borrow £10,000 over 3 years or a different term?
A longer term lowers the monthly payment but you pay interest for longer. At 9.9% APR, repaying £10,000 over 1 year costs £876.73 a month and £521 in interest, while 7 years costs £163.32 a month and £3,719 in interest. That is £3,198 more for the lower payment.
£10,000 at 9.9% APR by term
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 1 year | £876.73 | £521 | £10,521 |
| 2 years | £459.04 | £1,017 | £11,017 |
| 3 years | £320.22 | £1,528 | £11,528 |
| 4 years | £251.12 | £2,054 | £12,054 |
| 5 years | £209.91 | £2,594 | £12,594 |
| 7 years | £163.32 | £3,719 | £13,719 |
Interest versus capital: where your payments go
Early payments are mostly interest. In year 1 of this £10,000 loan, £819 of your £3,843 goes on interest and £3,024 reduces what you owe. By the last year the split reverses, which is why paying off a loan early saves more in the early years than the later ones.
£10,000 at 9.9% APR over 3 years
| Year | Interest paid | Capital repaid | Balance left |
|---|---|---|---|
| 1 | £819 | £3,024 | £6,976 |
| 2 | £519 | £3,323 | £3,652 |
| 3 | £190 | £3,652 | £0 |
Totals for each year of the loan.
What happens if you overpay your £10,000 loan?
Paying a little extra each month cuts the balance faster, so less interest is charged. Check that your lender allows overpayments and whether there is a charge: many allow up to a set amount a year without one.
Overpaying a £10,000 loan at 9.9% APR
| Extra payment | New monthly payment | Loan cleared in | Interest saved |
|---|---|---|---|
| +£30 a month | £350.22 | 33 months | £151 |
| +£60 a month | £380.22 | 30 months | £274 |
| +£120 a month | £440.22 | 26 months | £463 |
Compared with the normal 3 years term. Fixed rate, no fees.
How to work out if the payment is affordable
A common check is to keep all debt repayments, including this personal loan, below about a third of your take-home pay. A £320.22 payment fits that guide if your monthly take-home pay is at least £961.
Also look at what happens if your income drops. Choose a payment you could still make for several months without borrowing again.
UK rules worth knowing before you borrow
- Use an eligibility checker first. A "soft search" shows likely offers without leaving a mark on your credit file, while a full application leaves a hard search.
- The advertised "representative APR" only has to be offered to at least half of the people who are accepted, so your own rate can be higher.
- You have a right to repay a loan early. The lender can charge a limited amount of interest for doing so, so check the early repayment terms.
- Free, impartial help with debts is available from MoneyHelper, Citizens Advice, StepChange and PayPlan.
Ways to pay less interest
- Pick the shortest term whose monthly payment you can comfortably afford. Going from 7 years to 1 year would save £3,198 on this loan.
- Improve your credit file before you apply: register on the electoral roll, correct errors and pay existing bills on time.
- Make extra payments when you can, as long as there is no penalty. Each extra payment cuts the balance that interest is charged on.
- Borrow only what you need: every extra £1,000 at 9.9% over 3 years adds about £32.02 to the monthly payment.
Sources and further reading
Questions people ask
How much is a £10,000 personal loan per month over 3 years?
How much interest will I pay on £10,000 over 3 years?
Is it cheaper to borrow £10,000 over a shorter time?
What income do I need for a £10,000 personal loan?
Does this calculator include fees?
Results are estimates for information only, not financial advice. Read the full disclaimer.