How the UK payoff comparison works
The calculator starts with the current principal balance. At each monthly or weekly interval, it applies the equivalent periodic rate to the outstanding balance, then subtracts the scheduled payment. In the extra-payment scenario, it first deducts the lump sum entered and then adds the recurring extra to every regular payment. Both schedules stop when the remaining balance is cleared or when the maximum term is reached.
The difference between the two schedules' interest totals is the estimated interest saved. The number of scheduled payments is compared to show the time reduction. The net saving subtracts the one flat prepayment charge entered, if you added a lump sum or recurring extra. A charge can exceed interest saved, so the result can be negative.
Worked example: £50,000 balance
Assume a £50,000 outstanding balance, a 9% quoted APR, a £1,037.92 monthly payment and 60 months remaining. With no extra payment, the model estimates £11,639.66 of interest over 60 payments, with a final payment of £402.38.
Add £250 to each monthly payment and enter a £150 quoted charge. The model estimates £8,866.00 of interest and repayment in 46 payments, including a final payment of £909.60. That is £2,773.66 less interest and 14 fewer payments; after subtracting the £150 charge, estimated net savings are £2,623.66. The figures assume equal monthly intervals and payments applied directly to the balance as modelled.
What the estimate does not include
Business loan agreements vary. This estimate does not model daily accrual, irregular payment dates, missed or late payments, variable rates, fees added to the balance, a break cost based on remaining interest, payment holidays, or a lender's method for allocating overpayments. The quoted charge is a single amount, not a statutory cap or a prediction of what a provider will charge.
Ask your lender for a dated settlement figure and confirm whether extra payments reduce the term, reduce future instalments, or are held toward the next payment. Compare the written payoff figure with the estimate before acting. This tool is for scenario planning and does not assess eligibility, recommend a loan, or replace your loan agreement.
When to compare a refinance instead
If you are considering replacing the loan rather than paying it down, use a refinance comparison. A payoff estimate keeps the existing rate and payment structure in place; refinancing introduces a new rate, term, fees and lender terms, so it is a different calculation.
Inputs for the business loan payoff calculator
Current outstanding balance
Use the principal balance shown on your latest statement, rather than the original amount borrowed. Leave any separately quoted settlement charge out of this balance.
Quoted APR
Enter the annual APR from your UK loan quote. For this estimate, it is converted to an equivalent monthly or weekly rate; a lender may calculate interest using different dates or conventions.
Payment frequency and current payment
Choose monthly or weekly, then enter the required payment for that same frequency. The calculator treats each interval as equal and uses 12 monthly or 52 weekly periods per year.
Extra payment and lump sum
The recurring extra is added to every scheduled payment. A lump sum is applied directly to the balance immediately before the modelled schedule begins.
Quoted prepayment charge
Enter one flat charge only if your lender has quoted it for the scenario. Real agreements may calculate charges by date, amount, or remaining interest, so this field is not a legal or lender quote.
Maximum remaining term
This caps both schedules. If the regular payment does not repay the balance within the entered horizon, revise the inputs or check your lender statement.
CALCULATOR QUESTIONS
Business Loan Payoff Calculator questions
Can I use this for a UK business loan with weekly payments?
Yes. Select weekly and enter the weekly scheduled payment and recurring overpayment. The model uses 52 equal periods per year, so irregular dates and a lender's daily-interest calculation may produce different results.
Does the quoted prepayment charge always apply?
No. Enter it only when your agreement or lender quote gives you a charge for the scenario. The actual amount and trigger depend on your contract and payoff date.
Does an overpayment lower my next monthly payment?
This model keeps the regular payment unchanged and estimates an earlier payoff. Some lenders instead recalculate future instalments or apply extra funds to a later due date. Ask your lender how it will treat the payment.
Why can net savings be negative?
The interest reduction can be smaller than the one-off charge you entered. The estimate subtracts that charge from estimated interest saved.