2 min read
Definition
An overpayment reduces your outstanding principal faster than the schedule requires. On a reducing-balance loan, every extra pound off the capital removes all the future interest that pound would have accrued, so overpayments are one of the cheapest ways to cut borrowing costs — provided there is no early-repayment charge.
In plain terms
Paying a bit extra now saves a lot later, because you stop paying interest on the amount you clear.
Why it matters for your company
Check whether overpayments are allowed and free, then use spare cash to chip away at the principal. Model the saving with the loan repayment calculator.
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.
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Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.