The front loaded interest is really just an indication of the interest you'll pay if the loan runs its course, so is a moveable feast following overpayment. Can you clarify whether an overpayment will reduce future repayments evenly, or if it will reduce the term, as you suggest there's a choice? I thought loan agreements were usually on the basis of repaying a fixed amount each month, not a calculation of loan principal plus interest, divided by months remaining, so would think it would reduce the term, but I could be wrong. An excel can help but would rely on knowing how tesco calculates its interest (in particular how often it compounds) so you can see how much early repayment would reduce it.
Correct me if I'm wrong, @DeadP1xels , but I think this might be a flat-rate loan (very common for things like car loans), where the total interest calculated is Capital x term in years x annual flat rate of interest. Typically used to make headline rates seem more attractive than they actually are. For example: £5,000 over 3 years at 5% "flat rate" = total interest of £5,000 x 3 x 5% = £750, so total repayable is £5,750 over three years, or £159.72 per month. This would be equivalent to a "mortgage-style loan" at c.9.7% p.a. compound! For such flat-rate loans, there should be an APR figure given too, and you can use this in Excel to calculate repayments using the PMT function. It's a bit of a tricky function, though, so you need to be careful that your term and interest rate are both either monthly or annual, and if you are using annual figures then your result will be an annual amount too! I would check pretty carefully through the small print though, because loans can have clauses specifying additional payments that you need to make if paying off the loan early, or specifying the maximum overpayment that you can make in a given period of time, for example. Also worth remembering that how much you'll save by early repayment is going to be proportionate to how much you've borrowed, the term of the loan and the interest rate - depending on the combination of the above, you might not save that much, but on the other hand the savings could be significant. Always worth considering speaking to a financial adviser about this sort of thing. I am not a financial advisor, none of the above is financial advice, and it shouldn't be taken as financial advice
