How a settlement figure is calculated
When you repay early you don't pay the interest for the time you no longer borrow. The Early Settlement Regulations set how the rebate is worked out: the repayments still to come are discounted at the monthly equivalent of your APR back to the settlement date. The rebate is the difference between those repayments and the settlement figure.
The settlement date is 28 days after your lender receives your request (regulation 5). For loans longer than a year, the lender may defer it by one more month (regulation 6), so you pay up to 58 days' interest and the next repayment is also due. The calculator assumes you ask straight after a repayment, and treats 28 days as 28/30 of a month as the regulations' own examples do.
Worked example
This is the regulations' own first example: a £5,000 loan over 48 months at 14% APR, with repayments of £134.57, settled after the 12th repayment. With 36 repayments left (£4,844.52) and the one-month deferral, the settlement figure is £4,067.56 and the rebate £776.96. Without the deferral it's £4,024.75.
The regulations give £4,067.62 and £776.90. They work back from the original £5,000; this calculator works forward from your repayments, so it can differ by a few pence on short loans and up to about £1 on long ones.
Early repayment charges
Section 95A of the Consumer Credit Act lets a lender claim compensation for early repayment only on a fixed-rate loan not secured on your home, and only if you repay more than £8,000 in any 12 months. It must be fair and can't exceed 1% of the amount repaid, or 0.5% if a year or less of the loan is left, or the interest you would have paid.
The calculator shows that maximum. Many lenders charge nothing beyond the settlement interest, so check your agreement or ask for a settlement quote.
What this calculator assumes
You make equal monthly repayments at a fixed APR and settle straight after a repayment. It doesn't cover hire purchase or PCP balloon payments, loans secured on your home, or agreements made before 31 May 2005, which could use the older Rule of 78 method.
To pay off part of a loan instead, overpayments reduce what you owe and the interest you'll pay.
To see what a partial repayment saves, use the UK loan overpayment calculator .
Borrowing in the US?
The country choices above the inputs open separate local pages. US payoff amounts add daily interest to the principal, and any prepayment penalty comes from your contract rather than a national rebate rule. 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 prepayment penalty calculator in US dollars.
Inputs for the UK loan early repayment calculator
Monthly repayment
Your regular monthly repayment, from your credit agreement or statement.
Repayments left
How many monthly repayments are still to come after the one you've just made.
APR
The APR on your credit agreement, not the advertised representative APR.
Settlement period
28 days after your request, or 58 days if your lender adds the one-month deferral allowed for loans over a year. Your agreement or settlement quote says which.
Is the interest rate fixed?
A lender can claim an early repayment charge only on a fixed-rate loan. Most UK personal loans are fixed.
CALCULATOR QUESTIONS
UK loan early repayment calculator questions
How is a loan settlement figure calculated?
The repayments still to come are discounted at your APR to a settlement date 28 days after you ask, or up to 58 days if your lender defers it, as the Early Settlement Regulations set out.
Do I get interest back if I pay off a loan early?
Yes. You get a rebate of the interest for the time you no longer borrow, minus up to about two months' interest under the settlement date rules.
Can a lender charge me for paying off a loan early?
Only on a fixed-rate loan when you repay more than £8,000 in 12 months, and then no more than 1% of the amount (0.5% in the last year) or the interest you'd have paid.
How do I get my exact settlement figure?
Ask your lender for a settlement statement. They must send it, and it shows the amount and the date it's valid until.