1. What is the Loan Percentage Calculator?

The Loan Percentage Calculator helps you determine what percentage of your principal amount your interest payments represent on a monthly basis in the UK. This is useful for comparing loan offers and understanding the true cost of borrowing.

2. How Does the Calculator Work?

The calculator uses the simple percentage formula:

Where:

• \( Interest \) — Monthly interest payment in pounds (£)
• \( Principal \) — Original loan amount in pounds (£)

Explanation: This calculation shows what percentage of your original loan amount you're paying in interest each month.

3. Importance of Loan Percentage Calculation

Details: Understanding your loan percentage helps you compare different loan products, assess affordability, and make informed financial decisions. Lower percentages generally indicate better loan terms.

4. Using the Calculator

Tips: Enter your monthly interest payment in pounds, your original loan amount in pounds. Both values must be positive numbers, with principal greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: Is this the same as APR?
A: No, this is simpler than APR which includes fees and compounding. This shows just your monthly interest as a percentage of principal.

Q2: What's a good loan percentage?
A: This varies by loan type. For mortgages, 0.2-0.4% monthly is typical. Personal loans might be 0.5-2% monthly.

Q3: Does this include fees?
A: No, this calculation only considers interest payments. For total cost, you'd need to include any fees.

Q4: Can I use this for credit cards?
A: Yes, but credit card interest is typically calculated daily, so this would give you a simplified monthly view.

Q5: How does this help me compare loans?
A: By calculating the percentage for different loans, you can see which one costs you more in interest relative to the amount borrowed.