Early repayment calculator
Prepaying part of a loan saves more interest if you shorten the term than if you lower the payment, and the sooner you do it the more you save. With 20,000 € outstanding at 7% and 60 months left, prepaying 5,000 € in the first month saves 1,724.28 € and 16 months by shortening the term, or 924.10 € by lowering the payment from 396.02 € to 295.62 €.
net saving = interest avoided − cancellation fee
Updated: · Albea Systems
Result
| Reduce term | Reduce payment | |
|---|---|---|
| New payment | €396.02 | €295.62 |
| New term | 3 years 8 months | 5 years |
| Interest saved | €1,724.28 | €924.10 |
| Time saved | 16 months sooner | No change |
Enter the fee and the alternative return to see whether it pays off.
When it really pays off
The cancellation fee comes off the saving, and that money could have earned something elsewhere. If you enter the fee and the return you would get by investing it, the calculator compares both and tells you which leaves you ahead.
A partial prepayment is calculated on a constant-payment loan. Check your deed for the maximum fee allowed: outside the window the law covers it is often zero.
Capital does this calculation on your device, with the same figures you see here.
Download on the App StoreFrequently asked questions
Is it better to lower the payment or shorten the term?
Shortening the term saves more interest because you keep paying the same amount against a smaller debt. Lowering the payment eases the monthly budget but saves less.
When does prepaying pay off?
When the interest you avoid, less the fee, exceeds what you would earn by investing that money over the same period. The calculator makes that comparison.
What is a full prepayment?
Cancelling the loan by paying everything outstanding at once. You save all future interest, less the cancellation fee if there is one.
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- Download on the App StoreCapital does this calculation on your device, with the same figures you see here.