Calculate Extra Payment To Loan

Loan Amortization with Extra Payments:

\[ Interest_k = Balance_{k-1} \times r \] \[ Principal_k = PMT + extra - Interest_k \] \[ Balance_k = Balance_{k-1} - Principal_k \]

Loan Amount:

Annual Interest Rate:

Loan Term (years):

years

Extra Monthly Payment:

Regular Monthly Payment:

Total With Extra Payment:

Total Interest Paid:

Months Saved:

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1. What is Loan Amortization with Extra Payments?

Loan amortization with extra payments shows how making additional payments affects your loan payoff timeline and total interest paid. The calculator demonstrates the impact of paying more than your regular monthly payment.

2. How Does the Calculator Work?

The calculator uses these formulas for each payment period:

\[ Interest_k = Balance_{k-1} \times r \] \[ Principal_k = PMT + extra - Interest_k \] \[ Balance_k = Balance_{k-1} - Principal_k \]

Where:

\( Interest_k \) — Interest portion of payment k
\( Principal_k \) — Principal portion of payment k
\( Balance_k \) — Remaining balance after payment k
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( PMT \) — Regular monthly payment amount
\( extra \) — Additional payment amount

3. Importance of Extra Payments

Details: Making extra payments reduces your loan balance faster, which decreases total interest paid and shortens the loan term. Even small additional payments can have a significant impact over time.

4. Using the Calculator

Tips: Enter the loan amount, interest rate, loan term in years, and any additional monthly payment you plan to make. The calculator will show your amortization schedule with the extra payments applied.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my loan?
A: Extra payments reduce principal faster, which decreases total interest and may shorten your loan term.

Q2: Should I make extra payments or invest?
A: This depends on your loan interest rate vs. expected investment returns. Paying off high-interest debt often makes financial sense.

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

Q4: How should I apply extra payments?
A: Specify that extra payments should be applied to principal, not future payments.

Q5: Can I make one-time extra payments?
A: Yes, though this calculator shows the impact of consistent extra monthly payments.