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Estimates the settlement balance now and the interest you'd save by paying a loan off early. Assumes a fixed-rate annuity and no early-settlement fee.
Step 1 — overpay where it is free
Check the terms, then overpay when you have spare cash. On a reducing-balance loan, every pound off the principal removes all the future interest that pound would have cost — provided there is no early-repayment charge.
Step 2 — choose the shortest affordable term
A shorter term raises the monthly payment but cuts total interest, because you hold the money for less time. Borrow over the shortest term your cover comfortably supports.
Step 3 — refinance to a lower rate
If your profile has improved, refinance to a lower margin. Net off any early-repayment charge and arrangement fee first — see consolidating business debt.
Step 4 — manage a revolving balance tightly
On a revolving facility, draw only what you need and repay as soon as you can — daily accrual rewards it.
Step 5 — settle early if the maths works
Consider an early settlement if the interest saved beats what the cash could earn elsewhere and any charge. Model it with the calculator below.
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Frequently asked questions
What is the cheapest way to cut interest?
Overpaying a reducing-balance loan where overpayments are free — every pound off the principal removes all its future interest. Always check for an early-repayment charge first.
Does a shorter term always cost less overall?
Yes, at the same rate — you hold the money for less time. The trade-off is a higher monthly payment, so match the term to what you can comfortably afford.
Is it worth settling a loan early?
Only if the interest saved, net of any charge, beats what the cash could earn or is needed elsewhere. Get a settlement figure and do the maths.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.