£3,000 Personal Loan over 7 years: what it costs each month
What a £3,000 personal loan over 7 years costs at different rates
The rate you are offered depends on your credit score, your income and how much you borrow. The same £3,000 over 7 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 £1.41 and the total interest by about £119.
£3,000 over 7 years by interest rate
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 5.9% | £43.46 | £651 | £3,651 |
| 7.9% | £46.20 | £881 | £3,881 |
| 9.9% | £49.00 | £1,116 | £4,116 |
| 14.9% | £56.17 | £1,718 | £4,718 |
| 19.9% | £63.56 | £2,339 | £5,339 |
| 24.9% | £71.10 | £2,972 | £5,972 |
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 £3,000 over 84 months at 9.9% APR the monthly rate is 0.7898%, which gives £49.00. Multiplying by 84 months gives £4,116 repaid in total, so the cost of borrowing is £1,116.
Should you borrow £3,000 over 7 years or a different term?
A longer term lowers the monthly payment but you pay interest for longer. At 9.9% APR, repaying £3,000 over 1 year costs £263.02 a month and £156 in interest, while 7 years costs £49.00 a month and £1,116 in interest. That is £960 more for the lower payment.
£3,000 at 9.9% APR by term
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 1 year | £263.02 | £156 | £3,156 |
| 2 years | £137.71 | £305 | £3,305 |
| 3 years | £96.07 | £458 | £3,458 |
| 4 years | £75.34 | £616 | £3,616 |
| 5 years | £62.97 | £778 | £3,778 |
| 7 years | £49.00 | £1,116 | £4,116 |
Interest versus capital: where your payments go
Early payments are mostly interest. In year 1 of this £3,000 loan, £271 of your £588 goes on interest and £317 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.
£3,000 at 9.9% APR over 7 years
| Year | Interest paid | Capital repaid | Balance left |
|---|---|---|---|
| 1 | £271 | £317 | £2,683 |
| 2 | £239 | £349 | £2,334 |
| 3 | £205 | £383 | £1,951 |
| 4 | £167 | £421 | £1,530 |
| 5 | £125 | £463 | £1,067 |
| 6 | £79 | £509 | £559 |
| 7 | £29 | £559 | £0 |
Totals for each year of the loan.
What happens if you overpay your £3,000 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 £3,000 loan at 9.9% APR
| Extra payment | New monthly payment | Loan cleared in | Interest saved |
|---|---|---|---|
| +£5 a month | £54.00 | 74 months | £151 |
| +£10 a month | £59.00 | 66 months | £265 |
| +£20 a month | £69.00 | 54 months | £426 |
Compared with the normal 7 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 £49.00 payment fits that guide if your monthly take-home pay is at least £147.
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 £960 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 7 years adds about £16.33 to the monthly payment.
Sources and further reading
Questions people ask
How much is a £3,000 personal loan per month over 7 years?
How much interest will I pay on £3,000 over 7 years?
Is it cheaper to borrow £3,000 over a shorter time?
What income do I need for a £3,000 personal loan?
Does this calculator include fees?
Results are estimates for information only, not financial advice. Read the full disclaimer.