£10,000 Personal Loan over 5 years: what it costs each month
What a £10,000 personal loan over 5 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 5 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 £4.49 and the total interest by about £269.
£10,000 over 5 years by interest rate
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 5.9% | £192.15 | £1,529 | £11,529 |
| 7.9% | £200.99 | £2,059 | £12,059 |
| 9.9% | £209.91 | £2,594 | £12,594 |
| 14.9% | £232.53 | £3,952 | £13,952 |
| 19.9% | £255.50 | £5,330 | £15,330 |
| 24.9% | £278.71 | £6,722 | £16,722 |
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 60 months at 9.9% APR the monthly rate is 0.7898%, which gives £209.91. Multiplying by 60 months gives £12,594 repaid in total, so the cost of borrowing is £2,594.
Should you borrow £10,000 over 5 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, £878 of your £2,519 goes on interest and £1,641 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 5 years
| Year | Interest paid | Capital repaid | Balance left |
|---|---|---|---|
| 1 | £878 | £1,641 | £8,359 |
| 2 | £715 | £1,804 | £6,555 |
| 3 | £537 | £1,982 | £4,573 |
| 4 | £340 | £2,179 | £2,394 |
| 5 | £125 | £2,394 | £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 |
|---|---|---|---|
| +£20 a month | £229.91 | 54 months | £294 |
| +£40 a month | £249.91 | 49 months | £528 |
| +£80 a month | £289.91 | 41 months | £874 |
Compared with the normal 5 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 £209.91 payment fits that guide if your monthly take-home pay is at least £630.
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 5 years adds about £20.99 to the monthly payment.
Sources and further reading
Questions people ask
How much is a £10,000 personal loan per month over 5 years?
How much interest will I pay on £10,000 over 5 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.