How the calculators work
The methods behind Finance Calcs, in plain terms. Every figure on the site comes from one of six financial calculations — from the regulated actuarial settlement method to Stamp Duty Land Tax bands. Here is what each one does and when it applies.
Actuarial early settlement
Every regulated UK credit agreement must use the actuarial method to work out an early-settlement figure — a requirement of the Consumer Credit (Early Settlement) Regulations 2004.
The calculators derive the implied periodic rate from the agreement's repayments, then work the balance forward to the settlement date assuming every repayment is made when contractually due. The method works equally for loans with interest added upfront (car-type loans) and loans where interest accrues monthly (mortgage-type loans).
As the regulations allow, the settlement figure includes additional interest for deferment: 28 days on agreements of 12 months or less, 58 days on longer agreements.
Flat-rate loan interest and APR
HP and PCP agreements are typically priced with a flat rate of interest per annum — 10% flat on £100 of credit is £10 of interest every year, however much has already been repaid. The loan calculators turn a cash price, deposit and flat rate into the instalments, total charge for credit and total amount payable, with support for arrangement fees, option-to-purchase fees and PCP-style balloon payments.
Because a flat rate ignores the falling balance, every loan calculator also derives the true APR from the resulting schedule, so agreements can be compared like-for-like whatever rate each one quotes.
The Rule of 78
The Rule of 78 shares a loan's interest across the term in reverse proportion — the first month of a 12-month agreement carries 12/78ths of the interest, the last just 1/78th — and bases the settlement rebate on the weights still to run.
The Early Settlement Regulations 2004 outlawed it for regulated agreements because it gives a less-than-fair rebate, but it remains in use on non-regulated agreements (typically company loans) that fall outside the Consumer Credit Act. The calculator defaults to a two-month deferment, which can be altered.
Mortgage amortisation and overpayments
Repayment mortgages amortise on a reducing balance: each month interest is charged at 1/12 of the annual rate on the outstanding balance, and the rest of the payment repays capital. The contractual monthly payment is the standard annuity formula solved over the remaining term.
The overpayment calculator re-runs that schedule month by month with extra money applied straight to the balance — a regular monthly overpayment, a one-off lump sum, or both — and reports the interest saved and how much sooner the mortgage clears, assuming the rate holds for the remaining term.
Stamp Duty Land Tax bands
Stamp Duty Land Tax on homes in England and Northern Ireland is banded like income tax: each slice of the purchase price is taxed at its own rate, so the higher rates only apply to the part of the price above each threshold.
The calculator applies the bands in force from 1 April 2025, first-time buyer relief with its £500,000 price cap, and the 5 percentage-point surcharge on additional properties — and shows the tax from each band, not just the total. Scotland (LBTT) and Wales (LTT) charge separate taxes with different bands.
Compound interest
Compound interest pays interest on interest: each time an account credits interest, the next calculation is made on the new, larger balance. The calculator accrues interest monthly at 1/12 of the annual rate and credits it at the frequency you choose — monthly, quarterly or yearly — with contributions added each month.
Crediting more often compounds slightly faster, which is why UK accounts advertise an AER — the annual equivalent rate that makes different crediting frequencies comparable on a like-for-like basis.