Loan Prepayment Calculator
Prepaying a loan means paying more than your required monthly installment, with the surplus going straight to the outstanding principal. Because interest is charged on the balance, shrinking that balance early stops future interest before it ever accrues. This calculator compares your normal schedule against the same loan with a fixed extra amount each month, and shows the two numbers that matter most: the interest you avoid and the months you cut off the term.
- Principal
- Interest
- Months saved
- 3 yr 8 mo
- New payoff term
- 16 yr 4 mo
- Original total interest
- $251,864.04
- New total interest
- $198,234.04
Paying 200 extra per month clears the loan 44 months early and saves 53,630 in interest.
Amortization schedule
| Year | Payment | Interest | Principal | Balance |
|---|---|---|---|---|
| 1 | $27,493.20 | $19,719.05 | $7,774.15 | $242,225.85 |
| 2 | $27,493.20 | $19,073.80 | $8,419.40 | $233,806.45 |
| 3 | $27,493.20 | $18,374.99 | $9,118.21 | $224,688.24 |
| 4 | $27,493.20 | $17,618.19 | $9,875.01 | $214,813.22 |
| 5 | $27,493.20 | $16,798.57 | $10,694.64 | $204,118.59 |
| 6 | $27,493.20 | $15,910.92 | $11,582.29 | $192,536.30 |
| 7 | $27,493.20 | $14,949.59 | $12,543.61 | $179,992.69 |
| 8 | $27,493.20 | $13,908.48 | $13,584.72 | $166,407.97 |
| 9 | $27,493.20 | $12,780.95 | $14,712.25 | $151,695.72 |
| 10 | $27,493.20 | $11,559.84 | $15,933.36 | $135,762.37 |
| 11 | $27,493.20 | $10,237.38 | $17,255.82 | $118,506.55 |
| 12 | $27,493.20 | $8,805.16 | $18,688.04 | $99,818.50 |
| 13 | $27,493.20 | $7,254.06 | $20,239.14 | $79,579.36 |
| 14 | $27,493.20 | $5,574.22 | $21,918.98 | $57,660.38 |
| 15 | $27,493.20 | $3,754.96 | $23,738.24 | $33,922.14 |
| 16 | $27,493.20 | $1,784.70 | $25,708.51 | $8,213.63 |
| 17 | $8,342.81 | $129.18 | $8,213.63 | $0.00 |
Ways to optimize
Real what-if scenarios calculated from your numbers.
Scenarios use the exact same math as the calculator — no estimates.
How it works
A standard installment is split between interest on the current balance and repayment of principal. When you add an extra payment, none of it is interest — it all reduces principal. That smaller balance then accrues less interest next month, so the following payment retires even more principal. The effect compounds in your favour, which is why prepayment is so much more powerful than its size suggests.
The calculator builds two full amortization schedules from your inputs. The first uses the contractual installment only. The second adds your extra amount every month until the balance hits zero — which happens earlier. Subtracting one total from the other gives the interest saved, and comparing the payoff months gives the time saved. The schedule shown is the accelerated one, so you can see the balance fall faster than the original term would allow.
Each month the scheduled EMI is paid plus an extra amount that goes entirely to principal: principal_k = (EMI + extra) − interest_k, where interest_k = balance · (annual rate ÷ 12 ÷ 100). Because every extra dollar removes balance that would otherwise accrue interest for the rest of the term, the loan amortizes faster. Interest saved = total interest without extra − total interest with extra.
Worked example
Take a 250,000 balance at 8% with 20 years (240 months) left. The contractual installment is about 2,091 a month, and over the full term you would pay roughly 251,800 in interest. Add 200 extra each month and the loan clears in about 196 months instead of 240 — 44 months (over 3.5 years) early — while total interest drops to roughly 198,200. That single 200-a-month habit saves you on the order of 53,600 in interest for an extra outlay of well under that, because much of the saving is interest that simply never accrues.
Things to watch out for
Some lenders charge a prepayment penalty or restrict extra payments to certain dates or amounts — check your loan terms before committing, and confirm the extra is applied to principal rather than held as a prepaid installment. On a 0% loan, extra payments shorten the term but save no interest, since there is none to save. Very large extra amounts can clear the loan in far fewer months than the original term, and the final installment is trimmed so the balance lands exactly on zero rather than overshooting.
Frequently asked questions
Is it better to prepay or to invest the extra money?+
Prepaying gives a guaranteed, risk-free return equal to your loan rate. If you can reliably earn more than that rate after tax elsewhere, investing may win; if not, or if you value certainty and a smaller debt, prepaying is the safer choice. This tool shows the guaranteed interest saved so you can compare it against your expected investment return.
When during the loan does prepaying help the most?+
Early. At the start the balance is largest, so each early extra payment blocks the most future interest. The same extra amount made years later removes far less interest because there is less remaining term for it to compound over.
Does an extra payment lower my monthly installment?+
No — the contractual installment stays the same. Prepaying shortens the term instead, so you make fewer payments overall. If you want a lower monthly payment, that is what refinancing or a recast does; this tool keeps the payment fixed and shrinks the timeline.
What if I can only make one extra payment a year?+
A single annual lump sum still helps, just less than spreading the same total across the year, because monthly extras start saving interest sooner. As a rough guide, set the extra-per-month field to your annual lump divided by twelve to approximate the benefit.
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Disclaimer: This calculator is for educational and informational purposes only and provides estimates, not financial advice. Interest rates, taxes, fees, and local rules vary and change over time. Confirm figures with a qualified professional before making any financial decision.
Last reviewed: 2026-06-22