See how much faster you can pay off a loan and how much interest you save by adding an extra amount to your monthly payment.
Why extra payments work so well
Interest is charged on your remaining balance each month. Any amount you pay above the required payment goes straight to principal, which lowers the balance that next month's interest is charged on. The effect compounds: the earlier you pay extra, the more you save.
How the calculator works
It simulates your loan month by month twice, once with your current payment and once with the extra amount added, then compares the payoff dates and total interest:
Each month: interest = balance × (rate ÷ 12); new balance = balance + interest − payment
Worked example
You owe $20,000 at 7% and pay $400 a month. That clears the loan in 60 months with $3,715 of interest.
Adding $100 a month (paying $500) clears it in 46 months, 14 months sooner, with $2,841 of interest. That is a saving of about $874.
Smart ways to find extra money
- Round up your payment. Paying $450 instead of $412 feels small but adds up.
- Use windfalls such as tax refunds or bonuses for one-off lump sums.
- Pay every two weeks instead of monthly. Half-payments every two weeks add up to one extra full payment a year.
- Trim one subscription and send that amount to the loan. The subscription cost tracker helps you find one.
Before you pay extra
- Make sure extra payments are applied to principal, not to next month's payment. Many lenders let you choose online.
- Check for prepayment penalties.
- Keep an emergency fund first, and pay off higher-interest debt such as credit cards before low-rate loans.
Frequently asked questions
Is it better to pay extra or invest?
Paying off a loan gives a guaranteed return equal to its interest rate. High-interest debt is almost always worth paying off first; for low-rate loans, investing may earn more over time but with risk.
Does this work for credit cards?
Yes, though the credit card payoff calculator is designed specifically for card balances.
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Results are estimates for planning and education only. They are not financial, tax, legal or medical advice. Check important numbers with a qualified professional.