See How Extra Payments Reduce Your Loan Time & Interest
Calculation Method
This calculator shows how extra payments change your loan by using standard amortization math. Monthly payments are based on the regular amortization formula:
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ – 1]Where:
- M = Monthly payment
- P = Loan principal
- r = Monthly interest rate (APR ÷ 12)
- n = Number of monthly payments
How interest is calculated each month:
- Interest = Current Balance × Monthly Rate
- Principal = Monthly Payment – Interest
- New Balance = Previous Balance – Principal
How extra payments work:
Extra money goes straight toward reducing your principal. This cuts future interest charges and shortens your overall loan term.
Lump-sum payments:
A one-time large payment immediately reduces your balance and lowers all remaining interest.
This method follows standard amortization practices and aligns with CFPB and Federal Reserve loan calculation guidelines.
Disclaimer: This tool provides estimates. Actual loan results may vary based on lender terms, fees, and policies.