How the calculator works
The monthly payment is the standard amortized payment: the fixed amount that pays off the loan, with interest, in exactly the term you choose. Each month, interest is charged on the remaining balance (APR ÷ 12), and the rest of your payment reduces the balance. Early on, much of each payment is interest; by the end, almost all of it is principal.
For example, $25,000 at 7% APR over 5 years costs $495.03 a month and $4,702 in interest. Paying $100 extra each month clears it 11 months early (49 payments instead of 60) and saves $939 in interest.
Why extra payments save so much
Every extra dollar goes straight to principal, so it stops being charged interest for the rest of the loan. That's why extra payments made early save the most, and why a long, high-rate loan like a mortgage responds so strongly to even small extras. Your required payment stays the same; you just reach the end sooner.
- Tell your lender it's for principal. Some lenders apply extra money to next month's payment instead of the balance unless you ask. Check your statement after the first extra payment.
- Check for prepayment penalties. Most auto, personal, and federal student loans don't have them, but some loans do. Your loan agreement will say.
- Pay the highest rate first. If you have several debts, extra money saves the most on the one with the highest APR (the avalanche method). The debt snowball vs avalanche calculator compares both orders.
- Keep a cushion. Money paid into a loan is hard to get back. Many people build a small emergency fund first; the savings goal calculator shows how long that takes.
FAQ
Why is my lender's number slightly different?
Lenders may charge interest daily, round each payment to the cent, or have a first payment period that isn't exactly one month. Those details move the totals by a few dollars. This calculator uses the standard monthly method.
Should I pay extra on my loan or save the money?
Paying extra earns you a guaranteed return equal to the loan's interest rate. If the rate is higher than what your savings earn after tax, extra payments usually come out ahead, as long as you still have an emergency fund and aren't missing out on an employer retirement match.
What about biweekly payments?
Paying half your payment every two weeks adds up to 26 half-payments, or 13 full payments a year. That's about the same as paying one-twelfth of a payment extra each month: enter your payment ÷ 12 as the extra amount to see the effect.
Does this calculator store my data?
No. Everything is calculated in your browser.
Shopping for a car? The car affordability calculator works backward from the payment you want to the price you can afford.
For education and planning only. This isn't financial advice. Results are estimates; your loan agreement and lender statements are the final word.