BEHIND THE NUMBERS
How this calculation works
Worked example
The normal payment is £100. A £200 lump sum leaves £1,000; paying £200 a month clears it in five months. Seven months are saved, but at 0% interest the interest saving is £0.
Example result: £0.00
Term reduction is the chosen outcome
Some lenders instead recalculate the regular payment after an overpayment. That gives a different saving. This model holds the original payment constant, so you can see how quickly the smaller debt is cleared.
Fees can outweigh the interest saving
The headline result subtracts the charges you enter. It can be negative. The calculation does not infer a penalty-free annual allowance from a typical market practice.
Assumptions and rounding
- The normal payment remains fixed and overpayments reduce the term.
- Payments are in arrears, interest is constant and the final payment is capped at the amount due.
Questions about this calculator
Can I enter a one-off payment only?
Yes. Set the monthly extra amount to zero. Set the lump sum to zero to model only regular extra payments.
Why is the final payment smaller?
The remaining balance and that month’s interest can be less than the normal payment plus overpayment. The model pays only what is needed to clear it.