How to calculate interest on a loan

Interest rates, APR, repayment times – it can all be slightly confusing for those not familiar with personal loans and finance generally. However, personal loans aren’t as complex as some may think and working out interest rates doesn’t have to be complicated. To help you out, we’ve answered a few important questions surrounding how to calculate interest on a loan.

What is APR and how does it differ from interest?

APR stands for ‘annual percentage rate’, which takes into account the interest rate and any other additional charges for credit for a whole year. This figure comes about through both credit checks and, in Koyo Loans’ case, Open Banking data. Using Open Banking data on top of checking your credit score allows us to give you a fairer tailored APR rate for your loan that is more aligned with your real financial situation. 24.9% APR Representative.

In contrast to simply calculating interest on a loan, an APR figure gives you a clearer and more realistic picture of the amount you’ll be paying back to a lender over a whole year. Not only does this help you quickly work out whether a loan is suitable for you, but the percentage figure also allows you to compare rates with other lenders. So, to sum up, APR is a percentage figure that contains both interest rate and additional charges over a whole year rather than just a monthly rate/fee.

Using a personal loan calculator

Personal loan calculators are a great way for you to easily work out the likely APR rate on your loan. Here at Koyo, we’ve got our very own calculator, which you can find on our homepage. 24.9% APR Representative. We’ve specifically designed it to be as fuss-free as possible, giving you the opportunity to get a good idea of rates before the application process even starts. 

Step 1

The first step is to input the loan amount you wish to receive, either manually or using the slider provided. In our case, we offer loans that range from £1,500 to £12,000.

Step 2

Next up is inputting the length of time you need to pay back your loan amount, which is between six months and five years at Koyo. Again – you can put this data into the calculator either manually or using the slider. 

Step 3 

Finally, you’ll be given the results of your calculation on the right-hand side of the calculator. This data will include your Representative APR, total interest in monetary terms and the total amount you’ll need to pay back.

Simple as that!

How do I apply for a loan?

Applying for a loan takes just 3 minutes at Koyo. All we need is some of your personal information, including your salary, address and phone number, and there will be a decision and payment within 48 hours. One of the most important aspects of applying for a personal loan at Koyo is that it will not have an impact on your credit score, unless you are approved. 24.9% APR Representative.

Looking for a flexible and fair personal loan between £1,500-12,000? Koyo Loans could be ideal for you. Use our personal loan calculator today to determine your representative rate and send an application here. www.koyoloans.com. 24.9% APR Representative.