Loan Amortization with Extra Payments Calculator
Additional amount to pay every month
Additional payment once per year (e.g., tax refund, bonus)
How Extra Payments Work
What are extra payments? Additional amounts beyond your required monthly payment that go directly to reducing your loan principal, saving you interest.
- Reduce total interest paid over life of loan
- Shorten loan term (pay off years earlier)
- Build equity faster
- Save thousands to tens of thousands in interest
- Round Up: Pay $2,000 instead of $1,897.22
- 13th Payment: Make one extra full payment per year
- Biweekly Payments: Pay half your monthly payment every 2 weeks (26 payments = 13 months)
- Windfall Payments: Apply tax refunds, bonuses, or gifts to principal
- Percentage Increase: Pay 10-20% more each month
Example: On a $300k 30-year loan at 6.5%, paying just $200 extra per month saves $94,000 in interest and pays off the loan 7 years earlier.
See how extra monthly or yearly principal payments shorten your loan term and cut total interest on any amortizing loan.
Formula
Worked Example
The regular payment on $25,000 at 7% for five years is $495.03. Adding $100 a month goes straight to principal, so the loan is gone in 49 months and total interest drops from $4,702 to $3,763.
Frequently Asked Questions
Do extra payments go toward principal or interest?
On a standard amortizing loan, the scheduled payment covers that month's interest first and anything above it reduces principal. Most servicers apply extra amounts to principal automatically, but confirm yours does not treat them as early future payments instead.
Is it better to pay extra monthly or once a year?
The same total extra amount saves slightly more interest when spread monthly, because principal drops sooner. Either way, the savings come from cutting the balance early in the term when interest charges are largest.
Should I check for prepayment penalties first?
Yes. Most federal student loans and many personal loans have no prepayment penalty, but some auto loans and mortgages do. A penalty can erase the benefit of small extra payments.
Common Mistakes
- !Assuming extra payments automatically hit principal — some servicers advance the due date instead unless you specify principal-only.
- !Ignoring prepayment penalties that can wipe out the interest savings on certain auto and mortgage loans.
- !Paying extra on a low-rate loan while high-interest debt compounds untouched — compare rates across all debts first.