How do extra loan payments work?
An extra payment goes straight to the principal, so the balance drops faster and every later interest charge is smaller. The regular payment stays the same; what changes is how many payments are left. On a 100,000 loan at 4.5% over 30 years, paying 100 extra each month ends the loan 102 months early and saves 26,377.76 in interest.
Steps
- Enter the loan amount, annual rate and term.
- Pick equal payment (annuity) or equal principal.
- Add a monthly, yearly or one-time extra payment.
- Compare the two columns: months and interest without and with the extra payment.
- Open the schedule to see every payment, or download it as CSV.
Formula
- P = loan amount
- r = annual rate / 100 / 12
- n = number of monthly payments
- extra = any additional amount paid in that month, applied to the principal
What this calculator assumes
Extra payments are assumed to go straight to the principal and shorten the loan. Prepayment fees, the way your lender posts payments, rate changes and payment recasting may differ. The regular payment is never recalculated.
Frequently asked questions
Does an extra payment lower my monthly payment?
Not here. The regular payment stays the same and the loan simply ends sooner. Lowering the payment instead is called recasting and is not modelled by this calculator.
Is it better to pay extra every month or once a year?
A monthly extra usually saves more because it reduces the balance earlier, and interest is charged on the balance every month. Enter both to compare on your own numbers.
Why do the savings get smaller later in the loan?
Interest is charged on the remaining balance. Early on the balance is large, so cutting it saves a lot of future interest. Near the end most of the payment is already principal.
Does this include prepayment penalties?
No. Some lenders charge a fee for paying early. Check your loan agreement and subtract that fee from the interest saved.
What is the difference between equal payment and equal principal?
With equal payment every instalment is the same. With equal principal the principal part is fixed, so the first payments are larger and they fall over time.
Can I model a lump sum from a bonus?
Yes. Add a one-time extra payment and set the payment number it lands on. You can add up to ten of them.
Are my numbers sent anywhere?
No. The calculation runs in your browser and nothing you type is sent to a server.
Which currency is this in?
None. The tool works with plain numbers, so you can use it with any currency.
This is an estimate for a fixed-rate loan. It does not model variable rates, interest-only periods, taxes, insurance, fees or prepayment penalties. Confirm the exact figures with your lender before making a decision.
Sources: Amortization (Wikipedia)