Why extra payments work
Every extra amount you pay goes straight to the loan balance, not to interest. A smaller balance means less interest charged next month, so the effect snowballs: the money you save on interest lets even more of your next payment attack the principal. This calculator compares your current payment with an extra amount added, and shows how many months you save and how much interest you avoid. It works for any fixed-rate loan.
Two examples
A 10,000 balance at 6% with a 200 monthly payment clears in about 58 months. Add 100 a month and it clears in 37 months instead, saving roughly 21 months and about 570 in interest.
Push the extra to 200 a month, so you pay 400 in total. Now the loan is gone in about 27 months. Doubling the extra payment did not just halve the remaining time, it saved even more interest, because the balance falls fastest when it is still large.
How do you get the most from compound interest?
Extra payments help most early in a loan, when the balance and the interest on it are highest. Even small, regular extras add up over time. Two things to check first: make sure your lender applies the extra to the principal rather than to future payments, and confirm there is no early-repayment penalty that would eat into the saving.
Frequently asked questions
Does it work for a mortgage?
Yes, for any fixed-rate loan with a set monthly payment, including mortgages, personal loans and car loans.
Does it work for any loan?
Yes, for any fixed-rate loan with a set monthly payment: personal, business, car or mortgage.
Why does it say the loan never pays off?
If the monthly payment is less than or equal to the monthly interest, the balance cannot fall. Increase the payment.
Are early-repayment penalties included?
No. Some lenders charge a fee for paying off early. Check your loan terms before making large extra payments.