What paying a bit more each month actually saves you.
Time saved
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Interest saved
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Normal payoff time
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With extra payment
Balance falling with the extra payment
Assumes a fixed rate and that extra payments go straight to principal with no prepayment penalty — check your loan terms, since some charge a fee for early payoff.
How this works
Each month: Interest = Balance × rate ÷ 12
Principal paid = Payment (+ extra) − Interest
Balance falls by Principal paid, repeated until it reaches zero
Extra payments save the most on long, high-rate loans — a 30-year mortgage benefits far more than a 5-year car loan at a similar rate.
Because interest is front-loaded, extra payments made early in the loan save more than the same extra amount made near the end.
Always confirm extra payments are applied to principal, not held as a credit toward next month's payment — some servicers do this differently unless you specify.
Currency
Amounts follow the currency selected above.
Where does the time saved come from?
Every extra dollar goes straight to principal, which lowers the balance interest is calculated on for every month afterward — so the loan reaches zero faster and less total interest ever accrues.
Is it better to pay extra or invest the difference?
It depends on your loan rate versus your realistic investment return. Paying extra on a loan is a guaranteed return equal to its interest rate; investing is not guaranteed but can outperform a low-rate loan over time. There is no universally correct answer.
Does my current payment already cover the interest?
It must, for the loan to ever pay off — this calculator checks that and gives an error if the payment you entered is too low to reduce the balance.
How do I calculate a loan payoff with extra payments?
Enter your current balance, interest rate and monthly payment above, then add the extra amount you plan to pay each month. The calculator runs the amortization both ways and shows the time and interest an additional or accelerated payment saves compared with the normal schedule.