InstalmentLoans

Overpayment Calculator

An overpayment calculator shows how paying a little extra each month shortens a loan and reduces the interest. Enter the amount, representative APR, term and extra monthly payment to see the months and interest you could save.

By the InstalmentLoans Editorial Team · Last updated 2 October 2026

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Enter your numbers and press Calculate. Nothing you type leaves your browser.

How this calculator works

An overpayment is any amount you pay above your scheduled monthly repayment. It goes straight to the capital, so less interest accrues and the loan clears sooner.

Scheduled repayment: M = P * r * (1 + r)^n / ((1 + r)^n - 1).

With an extra amount E each month, the balance falls faster. The calculator replays the schedule with a repayment of M + E and reports the new payoff time and total interest.

If the repayment does not cover the monthly interest, the balance never falls. Many UK loans allow overpayments, but some charge an early repayment charge, so check your agreement first.

Frequently asked questions

How does an overpayment save interest?
Extra money reduces the capital faster, so less interest accrues each month. That shortens the term and lowers the total interest paid.
Is there a limit on how much I can overpay?
Some lenders allow unlimited overpayments, while others charge an early repayment charge above a set amount each year. Check your loan agreement.
Are overpayments better than saving?
It depends on the interest rate on the loan compared with the rate you could earn on savings. Clearing higher-rate debt first usually saves the most.
What if I make a one-off overpayment instead?
A lump-sum overpayment reduces the balance immediately and has a similar effect. This calculator models a regular extra monthly amount, which is easier to compare with your budget.

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