Loan Balance Calculator

What this calculator does

This loan balance calculator works out how much capital remains outstanding at any point in a repayment loan, together with the monthly payment, total interest, and the effect of overpayments. It answers what you still owe rather than what you have paid, and those are very different numbers.

They diverge because payments are level while their composition is not. In the early months most of each payment covers interest and little touches capital; later the ratio reverses. Knowing where you sit on that curve is what makes decisions about settling early, part-exchanging, or overpaying possible.

When to use it

The usual trigger is wanting out of an agreement early. Before part-exchanging a car or selling a property, you need the outstanding balance to know whether the sale clears the finance or leaves a shortfall to fund. On car finance the gap between balance and trade value in years one and two is exactly the negative equity dealers offer to roll into your next agreement.

It is also the number to check against the halfway point on a hire purchase or PCP agreement, because voluntary termination under the Consumer Credit Act becomes available once you have paid half the total amount payable. And it is the starting figure for any remortgage or refinance comparison, since the balance is what would actually be refinanced.

Understanding the inputs

Loan amount is the capital originally advanced, not today's balance — the calculator derives the current position from the schedule. Interest rate is the annual rate on the agreement, and term in years is the original full term.

The number of payments made places you on the amortisation curve. Count payments actually taken rather than months elapsed, since any payment holiday leaves the balance higher than the schedule implies and usually capitalises the interest. The extra monthly payment field models regular overpayments; a single lump sum reduces total interest by more than the same amount drip-fed, because it removes the interest sooner.

How is this calculated?

Remaining Balance = P × [(1+r)^n − (1+r)^p] / [(1+r)^n − 1], where p = payments made.

A worked example

Take an £18,000 loan at 5.9 percent over five years, with a monthly repayment of about £347. After 30 payments — exactly halfway through in time — you have paid roughly £10,415, but the outstanding balance is still about £9,661.

So halfway through the term you have cleared only around £8,339 of the £18,000 capital, not £9,000, and the remaining £9,661 is more than what you have repaid in capital so far. That is the shape of amortisation on a mid-length loan, and it is why a settlement figure at the midpoint is always higher than borrowers expect.

Limitations and assumptions

This assumes a fixed rate, payments made on time, and standard monthly amortisation. It does not model payment holidays, capitalised arrears, variable rates, or agreements where interest is calculated daily. Any of those will place your real balance above or below the figure shown.

It also excludes accrued interest since your last payment and any early settlement interest the lender is entitled to retain. Use it to understand your position and plan a decision; ask your lender for a formal settlement figure, valid to a stated date, before actually clearing the agreement.