An overpayment is when you choose to pay more than your normal monthly repayment, either as a one‑off extra payment or as regular extra payments alongside your usual instalments. An overpayment plan replaces your existing schedule with a higher amount.
What happens when you make an overpayment:
You can pay your loan off faster and reduce interest. Extra payments go towards reducing your balance sooner, which can shorten the length of your loan and mean you pay less interest overall.
Your normal monthly payment usually stays the same. For standard overpayments, your regular contractual payment amount does not change, the overpayment is on top of this.
If you’re in arrears, you can set up an arrears overpayment plan. This means paying extra each month to catch up any missed payments or previous payment plans. In this case, your account is normally reported to credit reference agencies as an “arrangement to pay”.
Sticking to the plan helps you avoid default. As long as you keep up with the agreed overpayment plan, we won’t usually mark your account as defaulted just because you’re in arrears. If you miss an agreed instalment, the plan will end, your account will go back to its normal schedule and you may be at risk of receiving a Notice of Default.