1. What is the Personal Loan Payment Calculator?

This calculator computes monthly loan payments and shows the impact of making extra payments on your loan. It demonstrates how additional payments can reduce both the loan term and total interest paid.

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 simulates paying the loan with your extra payment amount each month to determine the actual payoff date and interest savings.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce the total interest paid and shorten the loan term. This calculator helps visualize these savings.

4. Using the Calculator

Tips: Enter the loan amount, interest rate, and term. Add any planned extra monthly payment to see its impact. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with extra payments?
A: Savings depend on loan amount, rate, and extra payment amount. Even $50-100 extra per month can save thousands in interest.

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

Q3: Are there prepayment penalties?
A: Most loans don't have prepayment penalties, but check your loan agreement to be sure.

Q4: How often should I make extra payments?
A: Monthly extra payments have the greatest impact, but even annual lump sums help.

Q5: Does this work for all loan types?
A: This works for standard amortizing loans (mortgages, auto loans, personal loans). Credit cards and interest-only loans work differently.