1. What is the Loan Prepayment Calculator?

The Personal Loan Prepayment Calculator helps you understand how making additional payments toward your loan principal can reduce your total interest paid and shorten your loan term.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula with prepayment adjustment:

Where:

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

Explanation: The calculator first determines your base monthly payment, then simulates how adding prepayments affects your loan payoff timeline and total interest.

3. Importance of Prepayment Calculation

Details: Making even small additional principal payments can significantly reduce the total interest you pay and help you become debt-free faster.

4. Using the Calculator

Tips: Enter your loan amount, interest rate, and term. Add any planned monthly prepayment to see how it affects your loan. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with prepayments?
A: Savings depend on your loan terms and prepayment amount. Even $50-100 extra per month can save thousands in interest.

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

Q3: Are there prepayment penalties?
A: Some loans have prepayment penalties. Check your loan agreement before making extra payments.

Q4: How does prepayment affect amortization?
A: Prepayments reduce principal faster, causing more of each subsequent payment to go toward principal rather than interest.

Q5: Is it better to refinance or prepay?
A: If you can get a significantly lower rate, refinancing might be better. Otherwise, prepaying your current loan may be simpler.