1. What is the Extra Repayment Personal Loan Calculator?

This calculator helps you understand how making extra payments on your personal loan can save you money on interest and reduce your loan term. It compares standard repayment schedules with scenarios including additional payments.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

Extra Payments: The calculator then applies your additional payment directly to the principal, recalculating the remaining balance and interest accordingly.

3. Importance of Extra Repayments

Details: Making extra payments can significantly reduce the total interest paid over the life of the loan and shorten the repayment period. Even small additional amounts can have a substantial impact.

4. Using the Calculator

Tips: Enter the loan amount, interest rate, and term in years. Add any extra monthly payment you plan to make. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on the loan amount, interest rate, and size of extra payments. Even $50 extra per month can save thousands in interest.

Q2: Should I pay extra or invest the money?
A: Compare the loan interest rate with potential investment returns. Paying off high-interest debt usually provides better guaranteed returns.

Q3: Are there penalties for extra payments?
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 the greatest impact, but even occasional lump sums help.

Q5: Does the calculator account for changing interest rates?
A: No, this calculator assumes a fixed interest rate for the entire loan term.