What will this loan really cost?
Turn a loan quote into one comparable number, an APR-equivalent, and the total it costs you in pounds, including fees.
Lenders quote rates in different ways, which makes loans hard to compare. A flat rate charges interest on the whole amount for the whole term, even as you pay it off, so it looks much cheaper than it is. Fees can be taken from the money you receive, added to the loan, or charged every month.
This calculator works out every payment, then finds the yearly rate that makes what you receive equal to what you pay back. That is the method the FCA sets for the APR on consumer credit. We call it an APR-equivalent because most business loans are outside those rules, so lenders do not have to quote one.
Results
- Interest
- £9,000
- Fees
- £1,500
- Total you pay, including fees
- £60,500
You receive £48,500 and pay £59,000 back over 36 months. The APR-equivalent is the yearly rate that makes those two match, counting when each payment is made. It is an estimate for comparing quotes, not a lender's offer.
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Worked example: A £50,000 loan over 3 years at a 6% flat rate
A made-up example, not a quote from any lender. The 3% arrangement fee is taken from the money paid out, so you receive £48,500 but repay on £50,000.
- Loan amount
- £50,000
- Fee taken from the loan
- £1,500
- Cash you receive
- £48,500
- Interest: 6% of £50,000 for 3 years
- £9,000
- 36 monthly repayments of
- £1,638.89
- Total cost (interest and fees)
- £10,500
- APR-equivalent
- 14.0%
A 6% flat rate works out at about 14.0% as an APR-equivalent, because interest is charged on the full £50,000 for all 36 months even as you repay it, and the fee comes out of the money you receive.
Worth knowing
- Ask for the total amount repayable in pounds, as well as the rate, and check it against the result here.
- Business loans over £25,000 are exempt from the consumer credit rules, so the lender does not have to show an APR. Loans of £25,000 or less to a sole trader can be covered.
- The result leaves out costs that are not paid in money, such as a personal guarantee or security over your assets, and any charge for repaying early.
- If the rate is variable, the result only holds while the rate stays the same.
Routes this works for
- Community development finance (CDFI) loans
- Growth Guarantee Scheme
- Social investment for charities and social enterprises
- Start Up Loans
- UK Export Finance General Export Facility
- British Business Bank regional investment funds
- Development Bank of Wales
- Invest NI loan and equity funds
- Scottish National Investment Bank
- Asset finance (hire purchase and leasing)
- Asset refinance and sale and leaseback
- Bank term loan
- Commercial mortgage
- Peer-to-peer business lending
- Bridging loan
- Mini-bonds and loan notes (non-transferable debt)
- Short-term unsecured business loans
Sources
- FCA Handbook, CONC App 1.2: calculation of the annual percentage rate of charge · checked 8 October 2026
- The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, article 60C: exempt agreements · checked 8 October 2026