£7,500 Personal Loan over 5 years: what it costs each month
What a £7,500 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 £7,500 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 £3.37 and the total interest by about £202.
£7,500 over 5 years by interest rate
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 5.9% | £144.11 | £1,147 | £8,647 |
| 7.9% | £150.74 | £1,544 | £9,044 |
| 9.9% | £157.43 | £1,946 | £9,446 |
| 14.9% | £174.39 | £2,964 | £10,464 |
| 19.9% | £191.62 | £3,997 | £11,497 |
| 24.9% | £209.03 | £5,042 | £12,542 |
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 £7,500 over 60 months at 9.9% APR the monthly rate is 0.7898%, which gives £157.43. Multiplying by 60 months gives £9,446 repaid in total, so the cost of borrowing is £1,946.
Should you borrow £7,500 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 £7,500 over 1 year costs £657.55 a month and £391 in interest, while 7 years costs £122.49 a month and £2,789 in interest. That is £2,399 more for the lower payment.
£7,500 at 9.9% APR by term
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 1 year | £657.55 | £391 | £7,891 |
| 2 years | £344.28 | £763 | £8,263 |
| 3 years | £240.17 | £1,146 | £8,646 |
| 4 years | £188.34 | £1,540 | £9,040 |
| 5 years | £157.43 | £1,946 | £9,446 |
| 7 years | £122.49 | £2,789 | £10,289 |
Interest versus capital: where your payments go
Early payments are mostly interest. In year 1 of this £7,500 loan, £658 of your £1,889 goes on interest and £1,231 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.
£7,500 at 9.9% APR over 5 years
| Year | Interest paid | Capital repaid | Balance left |
|---|---|---|---|
| 1 | £658 | £1,231 | £6,269 |
| 2 | £536 | £1,353 | £4,916 |
| 3 | £402 | £1,487 | £3,430 |
| 4 | £255 | £1,634 | £1,796 |
| 5 | £94 | £1,796 | £0 |
Totals for each year of the loan.
What happens if you overpay your £7,500 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 £7,500 loan at 9.9% APR
| Extra payment | New monthly payment | Loan cleared in | Interest saved |
|---|---|---|---|
| +£15 a month | £172.43 | 54 months | £221 |
| +£30 a month | £187.43 | 49 months | £396 |
| +£60 a month | £217.43 | 41 months | £655 |
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 £157.43 payment fits that guide if your monthly take-home pay is at least £472.
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 £2,399 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 £7,500 personal loan per month over 5 years?
How much interest will I pay on £7,500 over 5 years?
Is it cheaper to borrow £7,500 over a shorter time?
What income do I need for a £7,500 personal loan?
Does this calculator include fees?
Results are estimates for information only, not financial advice. Read the full disclaimer.