What Is Overpayment
If you borrowed 500,000 KZT and ended up repaying 620,000 KZT — the overpayment is 120,000 KZT. This money is the bank's income.
Overpayment depends on three parameters: loan amount, interest rate, and term. The higher the rate and longer the term — the greater the overpayment. Two thirds of the overpayment forms in the first half of the loan term — this is a feature of the annuity scheme.
Annuity Payment Formula
Most loans in Kazakhstan are repaid through annuity payments — equal amounts each month. The monthly payment is calculated by the formula:
P = S × (r × (1 + r)ⁿ) / ((1 + r)ⁿ − 1), where S = loan amount, r = monthly rate (annual / 12 / 100), n = term in months.
Overpayment = P × n − S. This is the sum of all interest over the entire term.
Calculation Example
Let's take a 500,000 KZT loan for 12 months at 20% per year:
- •Monthly rate: 20% / 12 / 100 = 0.0167
- •Monthly payment: ≈ 46,300 KZT
- •Total payments for the year: 46,300 × 12 = 555,600 KZT
- •Overpayment: 555,600 − 500,000 = 55,600 KZT (11% of the amount)
How Term Affects Overpayment
If we extend the term to 24 months at the same 20% rate: the payment decreases to ≈ 25,400 KZT (more comfortable), but the overpayment grows to ≈ 109,600 KZT — almost twice as much.
Longer term = smaller monthly payment, but significantly larger total overpayment. Take a loan for the minimum comfortable term.
How to Reduce Overpayment
A few proven ways:
- •Choose a lower rate — a 3–5% difference on a 500,000 KZT loan saves 15,000–25,000 KZT per year
- •Shorten the term — don't borrow for 5 years what you can repay in 2
- •Make early repayments — each early payment reduces the principal and lowers future interest
- •Compare offers — different banks offer different rates even for the same amount