Early Repayment Loan Calculator
Calculate how much time and interest you can save by making extra payments on your loan. See the comparison between your current payment schedule and an accelerated payoff plan. For full amortization details, use our amortization calculator or explore refinancing options.
How to Calculate Early Repayment Savings
- Determine your current loan balance, interest rate, and remaining term.
- Decide how much extra you can pay each month above your required payment.
- The extra payment goes entirely toward reducing principal.
- With lower principal, less interest accrues each month, accelerating payoff.
- Compare total interest with and without extra payments to see your savings.
Formula
Original Payment = P x [r(1+r)^n] / [(1+r)^n - 1]
New Payment = Original Payment + Extra Payment
Each month:
Interest = Remaining Balance x Monthly Rate
Principal Paid = New Payment - Interest
New Balance = Old Balance - Principal Paid
Continue until balance reaches zero.
Months Saved = Original Term - New Term
Interest Saved = Original Total Interest - New Total InterestExample
$150,000 balance at 6.5% with 240 months remaining, adding $300/month extra:
Balance = $150,000, Rate = 6.5%, Term = 240 months
Original Payment = $1,114.85/month
Total Interest (original) = $117,564
With $300 extra ($1,414.85/month):
New Payoff = 155 months (vs 240)
New Total Interest = $69,101
Months Saved = 240 - 155 = 85 months (7+ years!)
Interest Saved = $117,564 - $69,101 = $48,463
That $300/month extra saves you nearly $48,500 in interest!Extra Payment Savings Reference Table
| Extra/Month | Months Saved | Interest Saved | New Payoff |
|---|---|---|---|
| $100 | 36 months | $20,484 | 204 months |
| $200 | 62 months | $34,636 | 178 months |
| $300 | 82 months | $45,070 | 158 months |
| $500 | 110 months | $59,519 | 130 months |
| $750 | 134 months | $71,020 | 106 months |
| $1000 | 150 months | $78,695 | 90 months |
Based on $150,000 at 6.5% with 240 months remaining
Frequently Asked Questions
Is it always better to pay extra on my loan?
Generally yes, if your loan has no prepayment penalty. However, if your loan rate is very low (under 4%), you might earn more by investing the extra money instead. Also prioritize high-interest debt (credit cards) before making extra mortgage payments.
Do extra payments go toward principal or interest?
Extra payments should go entirely toward principal reduction. Most lenders apply extra payments to principal by default, but verify with your lender. Some require you to specify "apply to principal" to avoid having it applied to future payments.
What is a prepayment penalty?
Some loans charge a fee for paying off early, typically 2-5% of the remaining balance or a few months of interest. These are more common in older mortgages and some auto loans. Check your loan agreement before making extra payments.
Should I make biweekly payments instead?
Biweekly payments (half your monthly payment every 2 weeks) result in 26 half-payments per year, equivalent to 13 monthly payments instead of 12. This effectively adds one extra payment per year and can shave 4-6 years off a 30-year mortgage.
Is refinancing better than extra payments?
It depends. If you can refinance to a significantly lower rate (1%+ reduction), refinancing may save more. Extra payments are better when rates are similar or you want flexibility (you can stop extra payments anytime). Consider doing both for maximum savings.