Paying off a loan early usually saves interest, but the settlement figure is not always just the remaining balance. Lenders can include accrued interest and permitted compensation, so the actual amount needed to close the loan is often a little higher than the balance shown on your statement.
EARLY SETTLEMENT
Loan early repayment calculator
Estimated result
£1,100
- Remaining scheduled payments
- £12,600
- Early repayment total
- £11,500
- Months removed
- 30
Use the lender’s dated settlement figure. It may already include statutory interest adjustments or fees.
Compare your lender’s settlement figure with the remaining scheduled payments so you can judge whether early repayment is worth it.
Paying off a loan early usually saves interest, but the settlement figure is not always just the remaining balance. Lenders can include accrued interest and permitted compensation, so the actual amount needed to close the loan is often a little higher than the balance shown on your statement.
If a borrower has a £12,000 car loan over five years at 9.9% APR and settles after three years, the remaining scheduled payments might total about £6,072. If the lender’s settlement figure is about £5,690 plus a small fee, the early payment could save roughly £380 in interest. The calculator lets you compare that saving with keeping the loan open.
- Using the statement balance instead of the lender’s settlement quote.
- Ignoring accrued interest or any permitted settlement compensation.
- Assuming early repayment is always best even when the alternative is cheaper debt or a weak emergency fund.
- Settlement figures can include accrued interest and permitted compensation, so the amount needed today is often higher than the statement balance.
- The savings depend on the remaining term, the lender’s rules and whether the borrower would keep the loan long enough to pay the same interest anyway.
- Overpaying a low-rate loan can be less valuable than clearing an overdraft or credit card balance first.
This is the quick settlement check. If the early repayment figure is meaningfully below the remaining scheduled payments, you probably save money. If it is close, the decision often comes down to cash reserve and flexibility rather than raw interest.
Monthly instalment£254
Remaining scheduled paymentsabout £6,072
Settlement figureabout £5,690
Estimated saving£382
On a £12,000 loan over 5 years at 9.9% APR, settling after 3 years can leave roughly £6,072 in scheduled payments. A settlement quote around £5,690 would save about £382, before any lender fee or extra compensation.
How to use this with other debt decisions
Early repayment is most useful when the loan APR is higher than the return on cash you would otherwise keep aside. If the settlement quote is only a little below the remaining scheduled payments, the decision may depend on your emergency fund, not just the headline saving.
If the question is about cash flow rather than full closure, compare the loan against overpayments first. If the issue is a persistent overdraft, use the overdraft calculator before paying down a lower-rate instalment loan.
SOURCES & REVIEW
Checked against official guidance
Last reviewed 1 September 2026 · Rule version GB-2026.27.1
Daily/weekly source monitoring. If a source changes, the affected rule set is reviewed before publication.
All source links are kept visible so you can verify the figures used on this page.
Source line: Source: MoneyHelper guidance on repaying loans early and the lender’s dated settlement quote.
MoneyHelper: Repaying loans early ↗Sources, methodology and update policy →Report an issue or correction →WHY RESULTS DIFFER
Why two users can see different results
Why the result can differ
Different tax codes, payroll periods, Scottish bands, pension methods or lender assumptions can change the outcome.
One-off bonuses, pay frequency, overpayments, allowances and reliefs can move the result away from a simple annual estimate.
Where a rule depends on eligibility or legal status, this page shows an estimate and links to official guidance.
This section is intentionally repeated on key tools so the explanation stays near the result instead of being hidden in a separate policy page.
COMMON QUESTIONS
Frequently asked questions
What is an early settlement figure?
It is the amount your lender says is needed to close the loan today, including the balance, accrued interest and any permitted compensation.
Can UK lenders charge a fee for paying a loan off early?
For regulated personal loans they normally cannot charge an arbitrary exit fee, but they can include permitted interest compensation in the settlement amount.
Is it always worth paying a loan off early?
Usually yes when the loan rate is higher than your alternative returns, but it can be less useful near the end of the term or if it drains your emergency fund.
Does early repayment hurt my credit score?
Closing the account can change your credit mix slightly, but a settled loan is still a positive marker and any effect is usually temporary.
Can I part-settle instead of paying everything off?
Yes. Many lenders allow overpayments that reduce the balance, the term or the monthly payment, subject to the loan terms.
Can a smaller settlement fee still be a bad deal?
Yes. If the fee is large relative to the remaining interest, the early repayment may save less than expected.
Should I prioritise this over an overdraft or card balance?
Usually yes if the loan rate is lower than the overdraft or card APR, but the best order depends on the exact rates and fees.