1. What is a Lump Sum Repayment Calculator?

Definition: This calculator estimates the savings from making a lump sum repayment on a loan by comparing the total interest before and after the repayment.

Purpose: It helps borrowers understand how much they can save in interest by making additional payments toward their loans.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Savings — Amount saved in interest ($)
• Total Interest — Original total interest amount ($)
• New Interest — Revised total interest after lump sum payment ($)

Explanation: The difference between the original interest and the recalculated interest after the lump sum payment shows your savings.

3. Importance of Lump Sum Repayment Calculation

Details: Calculating potential savings helps borrowers make informed decisions about making additional payments and understanding the financial benefits.

4. Using the Calculator

Tips: Enter the original total interest amount and the new total interest amount after making the lump sum payment. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Where do I find the total interest amounts?
A: Your loan statements or online banking portal typically shows this information. You can also use loan amortization calculators.

Q2: Does this calculator account for early repayment fees?
A: No, you should check with your lender about any prepayment penalties and subtract those from your savings.

Q3: How accurate is this calculation?
A: It provides a basic estimate. For precise figures, consult your lender as interest calculations can vary based on loan terms.

Q4: Can I use this for any type of loan?
A: Yes, it works for mortgages, car loans, personal loans, etc., as long as you have the interest figures.

Q5: Should I always make lump sum payments?
A: It depends on your financial situation and loan terms. Compare potential savings against other investment opportunities.