How overpaying saves interest
Interest is charged each month on what you still owe. Any extra you pay goes straight off the balance, so every later month's interest is smaller and more of your normal repayment clears the loan. Paying the same monthly amount as before, you finish early and pay less interest overall.
UK lenders quote the APR as an effective annual rate (FCA CONC App 1.2). The calculator turns it into the matching monthly rate, (1 + APR)^(1/12) − 1, the way UK lenders work out repayments, so 7% APR is about 0.565% a month.
Worked example
You owe £10,000 at 7% APR with 5 years left, so the normal repayment is £197.00 a month and the interest still to pay is £1,819.94. Paying £50 extra each month clears the loan in 3 years and 11 months, 13 months early. You save £431.78 of interest, and your final repayment moves from 1 November 2031 to 1 October 2030 if the next one is due on 1 December 2026.
A one-off £2,000 lump sum instead, with no monthly extra, also ends the loan 13 months early and saves £705.41.
Your right to overpay a UK loan
Under section 94 of the Consumer Credit Act 1974 you can repay all or part of a regulated loan early at any time, and you get a rebate of the interest you no longer owe. Tell your lender first so the extra money reduces the balance rather than paying future repayments in advance.
On a fixed-rate loan the lender may claim compensation only if your early repayments in any 12 months add up to more than £8,000 (s.95A). The claim is capped at 1% of the amount repaid, or 0.5% when a year or less is left, and at the interest you would have paid. This calculator doesn't deduct that charge.
To pay the whole loan off and see the most a lender can charge, use the UK loan early repayment calculator with its settlement figure.
What this calculator assumes
The rate stays the same until the loan ends, the lump sum is paid now, and the monthly extra is paid with every normal repayment. The normal repayment doesn't change; some lenders instead lower your repayment and keep the end date, which saves less interest.
Interest is worked out monthly, so a lender that charges interest daily can differ by a few pence. It doesn't include any early repayment charge or fees.
Borrowing in the US?
The country choices above the inputs open separate local pages. US lenders quote a nominal yearly rate divided by 12, and the US page writes dates the US way. Choosing United States opens that page and resets the inputs; amounts are not converted.
For a loan from a US lender, use the US loan payoff calculator in US dollars.
Inputs for the UK loan overpayment calculator
Amount you owe
The balance left on the loan today, from your statement or online banking.
APR
The APR on your loan agreement. The rate shown is only an example.
Time left to repay
How long is left on the loan in years. Part-years are fine if they come to whole months, such as 2.5 years for 30 repayments.
Extra each month
The extra amount you'd pay with every normal repayment. Enter 0 to see a lump sum on its own.
One-off lump sum now
A single extra payment you make today. It must be less than what you owe; to clear the loan, use the early repayment calculator.
Next payment date
When your next normal repayment is due. The calculator counts on a month at a time to date your final repayment, with and without overpaying.
CALCULATOR QUESTIONS
UK loan overpayment calculator questions
Is it better to overpay monthly or with a lump sum?
The sooner the money comes off the balance, the more interest it saves, so a lump sum now usually saves more than the same total spread over many months.
Can a UK lender stop me overpaying?
No. On a regulated consumer loan you have the right to repay part or all of it early at any time under section 94 of the Consumer Credit Act.
Will I pay a charge for overpaying?
Only on a fixed-rate loan, and only if your early repayments come to more than £8,000 in 12 months. Even then the charge is capped at 1% of the amount, or 0.5% in the final year.
Does overpaying lower my monthly repayment?
Not in this calculator: you keep paying the same and finish sooner. Ask your lender which they'll do, because shortening the term saves more interest.