Scenario presets
Inputs
Results
No data
- Scheduled monthly payment
- -
- Total interest
- -
- Total paid
- -
- Time to payoff
- -
- Interest saved by extra payments
- -
- Payoff sooner by
- -
Monthly payment by interest rate and term
| Rate \ Term | -20% | -10% | Base | +10% | +20% |
|---|
Total interest by extra payment and interest rate
| Extra \ Rate | -20% | -10% | Base | +10% | +20% |
|---|
Yearly amortization schedule
| Period | Interest that month | Principal that month | Remaining balance |
|---|
Formulas and worked example
- Payment = P × r / (1 - (1 + r)-n), where r is the monthly rate and n the number of payments
- Monthly interest = Balance × r
- Monthly principal = Payment + Extra - Interest
A $200,000 loan at 6% over 30 years has a $1,199 payment and $231,676 of total interest. Adding $200 a month pays the loan off in 252 months (21 years) and cuts total interest to $151,876, saving about $79,800.
Self-check quiz
1. In a standard loan, the largest interest share of the payment occurs:
2. Extra payments applied to principal:
3. Raising the interest rate, with the same term, will:
Frequently asked questions
How is a loan payment calculated?
A fixed monthly payment equals principal times the monthly rate, divided by one minus the monthly rate plus one raised to the negative number of payments.
What is loan amortization?
Amortization is the schedule that splits each fixed payment into interest and principal. Early payments are mostly interest, and the principal share grows as the balance falls.
How much do extra payments save?
Extra payments go entirely to principal, which lowers the balance that interest accrues on. This shortens the loan and can save tens of thousands of dollars over a long term.
Is a shorter loan term better?
A shorter term raises the monthly payment but cuts total interest sharply. The right choice depends on cash flow and on what the freed cash could earn elsewhere.