Finance glossary
Repayment
In simple terms
A repayment is a payment you make to pay back money you borrowed — usually a set amount each month made up of part of the debt plus interest.
On this page
What does repayment mean?
A repayment is the money you pay back to a lender against a debt. On most loans and mortgages you make regular (usually monthly) repayments over an agreed term until the balance reaches zero.
Each repayment normally covers the interest for that period plus a slice of the original amount borrowed (the “capital” or “principal”).
How repayments work
On a “capital repayment” loan or mortgage, every payment reduces the balance, so by the end you owe nothing. Early on, more of each payment goes on interest; later, more goes on the balance.
On an “interest-only” arrangement, your monthly payment only covers interest and the balance stays the same — you need a separate plan to repay the capital at the end.
How could this affect me?
A longer term means smaller monthly repayments but more interest paid overall; a shorter term costs more each month but less in total. Overpaying, where allowed, can cut the interest you pay and shorten the term.
Missing repayments can lead to arrears, charges and a mark on your credit file, so it is important the monthly amount is genuinely affordable.
Things to watch out for
- Interest-only means the balance is not reducing — you still owe the full amount at the end.
- Stretching the term lowers monthly payments but usually increases the total cost.
- Some deals charge an early repayment charge if you overpay or clear the debt early.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- MoneyHelper, Different types of loan and how they work (opens in a new tab). Accessed 22 Aug 2026.