METHOD
Formula and method
The extra payment reduces principal immediately. Interest accrues monthly on the remaining balance.
Early loan repayment: what an extra principal payment saves
Compare a lower payment and a shorter term after an extra principal repayment.
01
Your inputs
Starting values are an example. Replace them with your own.
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02
Your result
Enter your details and run the calculation.
About this result
Informational calculations. Check assumptions, dates and jurisdiction before making a decision.
Full disclaimerWhich saves more: a lower payment or a shorter term?
The calculator subtracts a single extra payment from the outstanding principal and compares two scenarios. In the first the term stays the same and the payment falls, while in the second you keep the old payment and finish earlier, and it shows how many months that takes. For both it shows the saving after the early repayment fee you enter. Interest accrues monthly on the remaining balance, and the result is an illustrative scenario, not a bank statement.
TRACEABLE
Sources and validity
Basic arithmetic or geometry using the formula shown. Uses only your inputs.
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