Introduction
Paying extra on your loan each month can save you a lot of money in interest and help you become debt-free years sooner. But how much can you actually save? This extra payment calculator shows you the answer. Just enter your loan amount, interest rate, loan term, and the extra amount you want to pay. The calculator does the rest.
You will see exactly how much interest you save, how many months or years you cut from your loan, and your new payoff date. It also builds a full amortization schedule so you can compare your original loan payments side by side with your extra payment plan. Charts and downloadable reports make it easy to see the difference at a glance.
This tool works for fixed-rate loans with rates up to 15% and terms up to 30 years, including mortgages, auto loans, personal loans, and student loans. You can choose to make extra payments monthly, quarterly, semi-annually, annually, or as a one-time lump sum. You can also set a start and end date for your extra payments if you only plan to pay extra for a limited time.
How to Use Our Extra Payment Calculator
Enter your loan details and extra payment plan below. The calculator will show you how much interest you save, how much time you cut off your loan, and your new payoff date.
Original Loan Amount: Type the full amount you borrowed when the loan started. This can be between $1,000 and $3,000,000.
Annual Interest Rate: Enter the yearly interest rate on your loan. You can find this on your loan statement. It must be between 0.01% and 15%.
Original Loan Term: Enter the total length of your loan in years. For example, type 30 for a 30-year mortgage.
Years Remaining on Loan: Enter how many years you have left to pay. This must be equal to or less than the original loan term.
Extra Payment Amount: Enter the extra money you want to put toward your loan principal each time. This can be between $0 and $5,000.
Extra Payment Frequency: Pick how often you want to make the extra payment. Choose monthly, quarterly, semi-annual, annual, or one-time payment.
Extra Payment Start: Select the month and year you want to begin making extra payments.
Extra Payment End: Select when you want to stop making extra payments. Choose "Ongoing" to keep paying extra until the loan is fully paid off.
Click the Calculate button to see your results. Click Reset to start over with the original settings.
What Are Extra Payments on a Loan?
When you take out a loan, like a mortgage, you agree to pay it back over a set number of years. Each month, part of your payment goes toward interest (the fee the lender charges you) and part goes toward the principal (the actual amount you borrowed).2 Early in the loan, a bigger share of each payment goes to interest than later on, because your balance is still high. Over time, more of it goes to paying down what you owe.2
An extra payment is any money you pay on top of your normal monthly bill. When your lender applies this extra money to the principal, you owe less right away.6 When you lower the principal faster, less interest builds up each month. Over time, this can save you thousands of dollars and help you pay off your loan years ahead of schedule.
How Extra Payments Save You Money
Interest on most loans is calculated based on your remaining balance.8 The higher the balance, the more interest you pay. When you make extra payments, your balance drops faster. A smaller balance means less interest each month, which means even more of your regular payment goes toward the principal.2 This creates a snowball effect that speeds up your payoff.
For example, on a new $300,000 mortgage at 6.5% interest over 30 years, paying $100 extra every month from the first payment saves about $60,995 in interest and pays the loan off 4 years sooner. To see this in the calculator, set Years Remaining on Loan to 30.
Ways to Make Extra Payments
There are several ways to apply extra money to your loan:
- Monthly: Add a fixed amount to every payment. Even small amounts add up over time.
- Biweekly: Another strategy is switching to biweekly payments. Paying half of your monthly payment every two weeks makes 26 payments a year, which adds up to one extra monthly payment.6 Check whether your servicer charges a fee for a biweekly plan. You can get the same result without the fee by making one extra monthly payment each year.6
- Quarterly or annually: Make a larger extra payment every few months or once a year, such as when you get a bonus or tax refund.
- One-time lump sum: Apply a single larger payment, such as money from savings, directly to your principal. This calculator takes one-time payments of up to $5,000.
Things to Check Before Making Extra Payments
Before you start paying extra, make sure your lender applies the extra money to your principal and not toward future payments. Some lenders count extra money toward a future payment unless you ask them to put it toward your balance.5 Your monthly statement shows how each payment was applied.4 Also check if your loan has a prepayment penalty, which is a fee some lenders charge for paying off your loan early.1 Not all mortgages have one, so check your loan agreement.1 A penalty typically applies only if you pay off the whole balance within a set number of years, for example when you sell your home or refinance.1 Small extra payments toward principal normally do not trigger one, but a large lump sum sometimes can.1 For most home loans made today, federal rules allow a prepayment penalty only on a qualified mortgage whose rate cannot go up and that is not a higher-priced loan.7 Even then, it cannot apply after the first three years, and it cannot be more than 2 percent of the amount prepaid in the first two years or 1 percent in the third year.7
If you have an auto loan, check that it uses simple interest.3 With precomputed interest, the total interest is worked out when the loan starts and spread over your payments, so extra payments do not reduce the principal or interest you owe.3 Paying the loan off early may still get you a refund of some unearned interest.3
Extra payments work best when you start early in the life of your loan, because that is when your balance is highest and interest costs you the most. The sooner you begin, the more you save.