Owed after month 24: £3,865.
Monthly payment £201. Total interest £2,059.
Borrowing £10,000 at 7.9% APR over 5 years costs about £201 a month. You'd repay £12,059 in total — £2,059 of it interest.
Overpaying £100 a month clears it about 22 months early and saves £790 in interest.
Compare loan terms
Same £10,000 at 7.9% APR. Tap to load a term.
| £312/mo | £1,219 interest | |
| £201/mo | £2,059 interest | |
| £154/mo | £2,937 interest |
A shorter term costs more each month but far less in total interest. A longer term eases the monthly payment but you pay for the money over more years.
Year-by-year breakdown
| Year | Interest | Principal | Balance left |
|---|---|---|---|
| 1 | £704 | £1,708 | £8,292 |
| 2 | £569 | £1,843 | £6,449 |
| 3 | £423 | £1,988 | £4,461 |
| 4 | £266 | £2,146 | £2,315 |
| 5 | £97 | £2,315 | £0 |
Early payments are mostly interest; later ones mostly clear the balance. A shorter term raises the monthly payment but cuts the total interest sharply. Many lenders let you overpay or settle early — check for early repayment charges first. Not sure what the rate really means? Read what is APR? Buying a car? Compare PCP and HP with the car finance calculator. Clearing a card? Try the credit card payoff calculator.
Example loans
Early repayment charges and what settling saves
You can repay a regulated loan early, in full or in part, at any time. On a fixed-rate loan the lender can charge compensation only when you repay more than £8,000 early in a year, and it is capped at 1% of the amount repaid early — 0.5% if a year or less is left — and at the interest you would otherwise have paid.
| Plan | Interest saved | Max charge | Better off by |
|---|---|---|---|
| £10,000 at 7.9% over 5 years, plus £100 a month (clears 22 months early) | £790 | £0 | £790 |
| The same loan, settled after 2 years by paying the £6,449 owed | £786 | £0 | £786 |
| £20,000 at 6.9% over 5 years, settled after 2 years by paying the £12,790 owed | £1,362 | £128 | £1,234 |
Settling the smaller loan means repaying £6,449 early, under £8,000, so no charge is allowed. On the larger loan £12,790 is repaid with three years left, so the lender can ask for up to 1%: £128, against £1,362 of interest saved. Your settlement figure also includes interest up to the settlement date, normally 28 days after the lender gets your request. Settling car finance early follows the same rules.
Frequently asked questions
Can I pay off my loan early?
Yes. Under the Consumer Credit Act you can repay a regulated loan early, in full or in part, at any time. Ask your lender for a settlement statement: it shows what clears the debt, including interest up to the settlement date, normally 28 days after the lender gets your request.
Do loans have early repayment charges?
Only sometimes. On a fixed-rate personal loan, a lender can charge compensation only if you repay more than £8,000 early in a year. The charge is capped at 1% of the amount repaid early, or 0.5% if a year or less of the loan is left, and it can’t be more than the interest you would otherwise have paid. MoneyHelper notes it is typically around one or two months’ interest. Check your loan agreement for the exact terms.
How much interest can I save by overpaying?
It depends on the balance, APR and how much extra you pay. As a guide, adding £100 a month to a £10,000 loan at 7.9% APR over 5 years clears it almost two years sooner and saves roughly £800 of interest. Enter your own figures above to see the exact saving and the new payoff date.
Does overpaying reduce my monthly payment or my loan term?
On most UK personal loans, overpayments shorten the term — your contractual monthly payment stays the same and the loan simply ends sooner, which is what this calculator models. A few lenders instead recalculate a lower monthly payment over the same term, which saves less interest. Ask your lender which way they apply overpayments.
Is it better to overpay a loan or save the money?
Compare rates: if your loan APR is higher than the interest your savings would earn (it usually is), overpaying wins. Two exceptions — keep an emergency fund first, so an unexpected bill doesn’t force you into more expensive borrowing, and always cover priority debts (rent, council tax, energy) before overpaying a personal loan.
Can I make a one-off loan overpayment instead of monthly ones?
Yes — lenders must accept part payments on regulated loans. Enter it as a one-off lump sum above and choose the month: the calculator shows how much sooner the loan clears, the interest you save and the most your lender can charge. Use “Settle in full” to see what paying off the whole loan at that point saves.
Can I pay off car finance early?
Yes. According to MoneyHelper, the most you can be asked to pay to settle hire purchase early is the outstanding capital, not the future interest, plus the lowest of 1% of the amount repaid early, 0.5% if less than 12 months are left, or the remaining interest. On HP you can also hand the car back once you have paid half the total price.
Related calculators & guides
Sources & guidance
- Consumer Credit Act 1974, s.94 — the right to repay early, in full or in part ↗
- Consumer Credit Act 1974, s.95A — the cap on early repayment charges ↗
- MoneyHelper — Personal loans: repaying a loan early ↗
- MoneyHelper — Ending a car finance deal early ↗
Early repayment rules checked against the Consumer Credit Act and MoneyHelper on 27 September 2026 · How we calculate →
An illustration based on the amount, APR and term you enter, assuming a fixed rate and equal monthly payments for the whole term. The representative APR is a guide — the rate you are offered depends on your circumstances and credit history, and your actual agreement may include fees. This is not a loan offer or financial advice.
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