Loan Prepayment Calculator
What paying extra on a loan saves: an extra amount each month or a one-off sum, either to finish sooner or to keep the term and pay less each month.
Result…
How it's calculated
Payment = B × i ÷ (1 − (1 + i)^−n), i = yearly rate ÷ 12 Finish sooner: each month interest = balance × i; balance −= payment + extra − interest Lower the payment: new payment = (balance after month k − prepayment) × i ÷ (1 − (1 + i)^−(n − k))
Money paid on top of the normal payment comes straight off the balance, so every later month charges interest on less. Keeping the payment the same finishes the loan sooner and saves the most interest; asking the lender to recalculate keeps the end date and lowers the payment instead. Mortgages, car loans and personal loans all work this way.
Your numbers, step by step
About the Loan Prepayment calculator
This loan prepayment calculator shows what paying more than you have to does to a mortgage, car loan or personal loan. Enter what you owe, the interest rate and the years left, then an extra amount each month, a one-off sum, or both. Choose “Finish sooner” to keep the payment the same and see the new payoff time, the months saved and the interest saved. Choose “Lower the payment” to keep the end date: the one-off sum comes off the balance and the payment is worked out again over the months left. Money paid early comes straight off the balance, so every later month charges interest on less. The working is shown step by step with your numbers. For the full month-by-month schedule, use the amortization calculator.
How to use it
- Enter the “Loan balance” you owe now, the “Interest rate” and the “Years left”.
- Choose what to “Use the prepayment to” do: “Finish sooner” or “Lower the payment”.
- For “Finish sooner”, enter an “Extra each month”, a “One-off prepayment”, or both.
- For a one-off sum, set “One-off paid in month” to when you will pay it, counted from now.
- Read the interest saved and the new payoff time, or the new monthly payment.
Worked example
A 150,000 balance at 6% with 20 years left costs 1,074.65 a month and 107,915.18 in interest. Paying 150 extra a month clears it in 15 years 11 months, 49 months sooner, with 82,733.11 of interest: a saving of 25,182.07. If instead you pay a one-off 10,000 in month 12 and keep the term, the payment falls to 1,001.04, 73.61 less, and you save 6,782.69 in interest.
Updated
Questions people ask
How do I calculate how much a loan prepayment saves?
Work out the interest you would pay on the normal schedule, then run the loan again with the extra payments taken off the balance. The difference in total interest is the saving; the calculator does both runs for you.
Is it better to shorten the term or lower the payment?
Keeping the payment and finishing sooner saves more interest, because the balance falls faster. Lowering the payment saves less but frees up money each month.
Does a one-off payment early in the loan save more?
Yes. The earlier the balance falls, the more months of interest the payment avoids. Move “One-off paid in month” earlier to see the difference.
What mistake do people make with prepayments?
Assuming the lender applies extra money to the balance. Some hold it against future payments instead, so ask for it to go straight to the principal.
Are there limits to what this shows?
It assumes a fixed rate and no early repayment fee. Some loans charge for paying early or cap prepayments, and rules vary by country, so check your loan terms with the lender or a financial adviser.