Paying lump sum off of loan

KRB2725

Could somebody please explain how a lump sum overpayment works?

I got a balance & settlement figure for my loan and then made a lump sum over payment of just over 60%.

I then applied for new balance and settlement figures - I am hoping to overpay monthly now to get rid of it quicker.

However, the new balance is just the original balance minus the overpayment. The interest refund is only taken off against the settlement figure.

If I continue to make overpayments, will this interest refund figure just increase with time but only be allocated upon settlement?

Thanks in advance for any help.

Tixy

Different lenders will show an account differently.

Some will show the capital balance outstanding and others show the balance as the original balance plus interest/charges if it ran to term, less all payments.

It sounds like your is the latter.

But assuming your loan allows partial overpayments without charge then you will pay less interest overall by making those overpayments.