1. What is the Amortization Loan Calculator?

This calculator determines your monthly loan payment and shows how extra payments affect your loan term and total interest paid. It uses standard amortization formulas with adjustments for additional principal payments.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of months in loan term

Extra Payments: Any additional payment is applied directly to principal, reducing future interest calculations.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce total interest and shorten loan term. For example, $50 extra per month on a $200,000 mortgage could save thousands in interest and pay off the loan years earlier.

4. Using the Calculator

Tips: Enter loan amount, interest rate, term in years, and optional extra payment. All values must be positive numbers. The calculator shows regular payment, payment with extra, total interest, and months saved.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect amortization?
A: Extra payments reduce principal faster, decreasing future interest calculations and shortening loan term.

Q2: Should I pay extra principal or invest?
A: Depends on interest rate vs. expected investment returns. Paying extra is guaranteed return equal to loan rate.

Q3: Are there prepayment penalties?
A: Some loans have prepayment penalties - check your loan terms before making extra payments.

Q4: How often should I make extra payments?
A: Regular extra payments (monthly) have greatest impact, but even occasional lump sums help.

Q5: Does this work for all loan types?
A: Works for standard amortizing loans (mortgages, auto loans). Doesn't apply to interest-only or balloon loans.