Lump Sum Repayments Calculator Information
The Lump Sum Calculator calculates the time saved to pay off the loan and the amount of interest saved if a single additional lump sum repayment is made, equal to the entered amount of additional lump sum repayment after the loan has been in force for the entered number of years, in addition to continuing the regular repayments. The calculation is done at the repayment frequency entered, in respect of the original loan parameters entered, namely amount, annual interest rate and term in years.
Calculator Assumptions
Length of Month
All months are assumed to be of equal length. In reality, many loans accrue on a daily basis leading to a varying number of days’ interest dependent on the number of days in the particular month.
Number of Weeks & Fortnights in a Year
One year is assumed to contain exactly 52 weeks or 26 fortnights. This implicitly assumes that a year has 364 days rather than the actual 365 or 366.
Rounding of Amount of Each Repayment
In practice, repayments are rounded to at least the nearer cent. However the calculator uses the unrounded repayment to derive the amount of interest payable at points along the graph and in total over the full term of the loan. This assumption allows for a smooth graph and equal repayment amounts. Note that the final repayment, after the additional lump sum repayment amount, will be a partial repayment as required to reduce the loan balance to zero.
Rounding of Time Saved
The time saved is presented as a number of years and months, for all available repayment frequency options, namely monthly, fortnightly & weekly. This is rounded down to the next lower month and hence is slightly conservative.
Amount of Interest Saved
In contrast to the calculation of time saved, the calculation of the amount of interest saved is not rounded and is shown to full accuracy including the number of cents. This amount can only be approximated from the amount of time saved.