1. What is Loan Amortization with Extra Payments?

The loan amortization calculator with extra principal payments shows how making additional payments toward your loan principal can save you money on interest and shorten your loan term.

2. How Does the Calculator Work?

The calculator uses the standard amortization formula:

Where:

• \( PMT \) — Monthly payment
• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)

With Extra Payments: The calculator then applies your additional principal payment each month, recalculating the amortization schedule to show how it affects payoff time and total interest.

3. Benefits of Extra Principal Payments

Details: Even small extra payments can significantly reduce total interest and loan term. For example, an extra $100/month on a $300,000 mortgage at 4% can save ~$30,000 and pay off the loan 5 years early.

4. Using the Calculator

Tips: Enter loan amount, interest rate, term, and any extra monthly principal you plan to pay. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Should I pay extra principal or invest?
A: Compare your loan interest rate to expected investment returns. Paying extra is a guaranteed return equal to your interest rate.

Q2: Are there prepayment penalties?
A: Most US loans don't have prepayment penalties, but check your loan terms to be sure.

Q3: How do I specify extra payments go to principal?
A: With lenders, you often need to explicitly designate payments as "principal only" beyond your regular payment.

Q4: Is it better to make biweekly payments?
A: Biweekly payments (half every 2 weeks) result in 13 full payments/year instead of 12, which can have similar benefits to extra principal.

Q5: When does the extra payment have most impact?
A: Extra payments early in the loan term save the most interest since more of your payment goes to interest at the beginning.