Bulk payments are treated just like any other payment. The amount received is apportioned pro-rata to interest and capital, with a portion used to settle any late fee balance if applicable.
The effect of a bulk payment is to reduce the remaining balance on your loan faster than scheduled. In turn, this will reduce the value of the required monthly payment as this value is the result of amortizing the remaining balance over the remaining term. So the faster the balance is reduced in relation to the remaining term, the smaller the monthly obligation.
Please note that a bulk payment does not create a “credit facility” against which due monthly payments can be set-off. Whilst your loan still has an outstanding balance we expect a payment every month, unless an arrangement to this effect is in place with our payments team.
There is no penalty for making larger than expected payments or for settling the loan earlier than scheduled.