Loan calculator

This is how long you take to pay back the loan. A longer loan term will usually mean your monthly repayments are lower as they’re spread out over a longer period. But because you’ll be paying interest for longer, the loan will cost you more overall.

It's usually best to choose a loan term that allows you to comfortably pay back what you owe as quickly as you can without getting into financial difficulty.

Ideally you'll want a bank loan with the lowest interest rate you can get. But to understand the true cost of borrowing, it’s best to focus on the APR rather than the interest rate alone.

The APR – or annual percentage rate – is the total cost of borrowing money for a year. It’s shown as a percentage of the amount borrowed.

The APR includes the interest you’ll pay and any standard fees that are added to the bank loan, such as arrangement fees. You can use APR to compare loans and credit cards.

If you have a good credit score, you’ll typically be charged a lower rate of interest because lenders feel more confident in your ability to pay back the loan. This will make your repayments cheaper.

If you have a bad credit score, you’re likely to be charged a higher interest rate (and potentially a smaller loan) because the lender sees you as a greater risk.

Read our guide to find out what you can do to improve your credit score.