1. What is the Extra Payment Loan Calculator?

The Extra Payment Loan Calculator shows how making additional payments toward your principal can reduce your loan term and total interest paid. It generates an amortization schedule accounting for your extra payments.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• \( Interest_k \) — Interest portion of payment k
• \( Balance_{k-1} \) — Remaining balance after previous payment
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( PMT \) — Regular monthly payment
• \( extra \) — Additional principal payment
• \( Principal_k \) — Principal portion of payment k

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce your loan term and total interest. The calculator shows exactly how much you'll save by making additional principal payments.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Even $50-100 extra per month can save thousands in interest and reduce your loan term by years.

Q2: Should I pay extra principal or invest?
A: Compare your loan interest rate to expected investment returns. Paying off high-interest debt often provides better guaranteed returns.

Q3: Do extra payments immediately reduce my balance?
A: Yes, extra principal payments reduce your balance immediately, which then reduces future interest calculations.

Q4: Can I stop extra payments later?
A: Yes, unlike refinancing, you can stop extra payments anytime without penalty (check your loan terms).

Q5: How are extra payments applied?
A: Lenders must apply extra payments to principal, not future interest (U.S. law requires this for mortgages).